With open enrollment right around the corner, employers are already contemplating strategies to help lower their health plan costs. Spousal surcharges or carve-outs are two options, but how prevalent are they?
Surcharge vs. Carve-Out
A spousal surcharge is an additional employee contribution amount—usually defined as a per month amount—collected when an employee enrolls their spouse onto an employer plan even though the spouse has other coverage available with their own employer. Surcharges are typically not collected when a spouse does not have access to coverage from their own employer. Employers sometimes request that employees sign an affidavit verifying the status of their spouse’s coverage.
A spousal carve-out is when an employer chooses not to cover spouses under any circumstance. The Affordable Care Act (ACA) does not require employers with more than 50 employees to offer coverage to spouses.
Recent Survey Data on Spousal Surcharges
- The 2024 International Foundation of Employee Benefit Plans Employee Benefits Survey found that 13.5% of responding health plan sponsors impose a spousal surcharge and 7.1% include a spousal carve-out. The average monthly surcharge was $157.
- Survey results from the 2023 Mercer National Survey of Employer-Sponsored Health Plans showed that of companies with 500 or more employees, 15% require a spousal surcharge with a median monthly surcharge of $100.
- In KFF’s 2022 Employer Health Benefits Survey, 14% of employers indicated spouses can enroll in the health plan with conditions, such as paying a higher premium contribution and/or having higher cost sharing.
- In the 2022 Best Practices in Healthcare Survey from WTW, 27% of employers indicated they use spousal surcharges when spouses have employer coverage available.
Additional Methods to Control Costs
The following are additional strategies employers can implement to manage health plan costs:
- Change plan design, including deductibles, coinsurance, copays and provider networks
- Change insurance carriers
- Change funding methods, such as moving from fully insured to self-funded
- Add prescription drug tiers
- Implement disease management programs, such as a program specific to diabetes, or wellness discounts
- Complete dependent audits.
Next Steps for Employers
During a comprehensive review, employers should consider the potential implications of making health plan changes such as surcharges, carve-outs or other cost management techniques. If making changes, follow a process for updating the plan document. Provide clear communication to employees explaining the verification process and how it may affect them, possibly using example scenarios to improve understanding. In addition, allow employees adequate time for questions and to complete the documentation requirements.
Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.
