UPS to Drop Health Coverage for Working Spouses

By:  Brian Koenig
08/23/2013
       
UPS to Drop Health Coverage for Working Spouses

In anticipation of President Obama’s healthcare reform law, U.S. businesses are making drastic changes to employee-benefit plans, leaving Americans with higher premiums, larger deductibles, or sometimes no health coverage at all.

The United Parcel Service (UPS) is among a league of other companies now easing their healthcare burdens, by dropping coverage for 15,000 of its workers’ spouses who are eligible for coverage through their own employers.

And UPS, one of the country’s largest employers, attributes its decision not only to rising medical costs but also the costly provisions of ObamaCare. The soaring costs of medical care, “combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost,” reads a memo to employees.

In its decision, UPS has been added to the six percent of U.S. employers that omitted spouses from health coverage last year — a two-fold increase from 2008. “Is it a harbinger of things to come? Possibly,” Paul Fronstin, a director at the Employee Benefit Research Institute, said of the move. “Once a major employer like UPS takes a step, all of the others will at least start looking at it.”

Fronstin attributes UPS’ controversial decision to government manipulation of the free market, as businesses determine their health-benefit packages on employee recruitment and retention. “There’s a reason that employers have been offering health benefits voluntarily for decades,” he explains. “For some, it makes sense for business.”

UPS is now one of the highest-profile companies yet to eliminate working spouses from their company health plan. While many businesses already require surcharges for working-spouse health coverage, more are taking the next step by denying them coverage altogether. “They are simply saying to the spouse outright, ‘If you have coverage somewhere else you are not eligible here,’” says Edward Fensholt, a senior vice president at insurance broker Lockton Companies. “We don’t see a lot of that out there, but more than we used to.”

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