Amid growing public concern that an unintended result of the Affordable Care Act might be a broad elimination of corporate-sponsored health benefits, it appears that, at the least, the value of coverage for spouses and dependents is beginning a slow fade.
In a recent survey by consulting firm Aon Hewitt, 22% of 1,234 responding employers have already reduced their subsidies for covered dependents. The kicker is that an additional 50% expects to cut back over the next five years.
Also, while 10% of the respondents have eliminated coverage for spouses and domestic partners with access to other coverage, 49% more are looking at doing that within five years.
Further, the proportion of companies adopting a “unitized” pricing approach, where employee contributions to health benefits are on a per-person basis, may expand from 5% now to 52% in five years. In such an arrangement, an employee with, say, five kids would pay a higher premium than one with four kids, and so on, rather than both having access to the same “family” plan at the same price a family with one or two kids would pay.
“Plan sponsors with generous dependent subsidy levels often become an ‘employer of choice’ for people who don’t work there,” says Jim Winkler, Aon Hewitt’s chief innovation officer for health and benefits.
In cases where coverage is needed for only an employee and a spouse or domestic partner, it’s commonly assumed that prohibiting the latter from using the employer’s insurance when access to another employer’s insurance is available is more expensive for the couple. But, says Winkler, that’s not true unless, again, the premium rate for the non-employee is overly generous.
“It’s been the case for a long time that most employers subsidize employees more generously than their adult dependents,” Winkler says. “So, assuming the two employers’ plans are relatively on par with one another, paying for two employee-only plans will cost less than a single employee-plus-one plan.”
Still, having such a policy for adult-dependent coverage may be problematic, in that the company would be treating two groups of workers differently. Some would have spouses who don’t work and thus are eligible for coverage, while working spouses with access to their own separate coverage wouldn’t be, or perhaps they’d be required to pay a surcharge. “That doesn’t seem fair,” Winkler points out.
That’s one of the arguments in favor of unitized pricing, he notes: it is inherently fair, as employees pay an incremental price for each person covered.