Help! My Employer Just Dropped Spousal Coverage
Helping you make sense of your options when you’re suddenly scrambling for health insurance
Written by: Andrew Hall.
Your company can remove spousal coverage, meaning they choose not to cover spouses (and only children) as dependentsA dependent is a child, spouse, or domestic partner covered by another person's health insurance plan..
If you or your spouse lose coverage due to an employer dropping spousal coverage, you have options to secure coverage.
Looking into coverage with your employer is one coverage option to explore. Contact your employer’s Human Resources Department to inquire about coverage.
Purchasing individual health insuranceIndividual health insurance is coverage, purchased by you, that covers you and your family's medical needs. This type of insurance is offered and sold by private companies. is a highly customizable way to buy insurance that meets your health care needs.
As health care costs continue to rise, employers are exploring all options to cut costs and manage their health care spending. As part of the Affordable Care Act (ACA), employers can choose to offer medical insurance benefits only to employees and their dependent children, not to employees’ spouses — it’s called a spousal carve out. Still, this rule must apply consistently. An employer cannot discriminate by extending coverage to some employees’ family members but not to others.
Some employers apply spousal surcharges, a fee assessed if your legal spouse was on your employer’s plan but had access to coverage elsewhere. Others employ a more drastic measure: Cutting spousal coverage altogether.
If you or your spouse’s employer just dropped spousal coverage, you have options. Below, we’ve outlined two options you can look into today.
If you were on your spouse’s health plan and can now no longer be covered, talk to your employer’s Human Resources Department. (Similarly, if your spouse was on your health plan and lost coverage, he/she should speak with their Human Resources Department.)
Because you lost coverage, you’ve experienced a Qualifying Life Event (QLE). This means you can enroll in your employer’s plan (assuming you meet other eligibility requirements as hours worked). Ask your Human Resources department for a Summary of Benefits and Coverage (SBC) and a cost summary of your plan’s benefits to determine if it’s the right fit for you.
Keep in mind that most employer-sponsored health plans only allow a 30-day window for you to enroll after experiencing a QLE.
Individual health insurance plans offer flexibility and customization on a few different fronts. When shopping for insurance on a health insurance marketplace, you can:
- Tailor benefits to your specific health care needs.
- Pick a plan that includes your favorite doctors in-network.
- Find a plan that meets your budget. When it comes to individual health insurance, you have 60-days to enroll in health insurance after experiencing a QLE.
What’s the difference between spousal carve out and spousal surcharge?
In the spousal carve out, the employer defines that spouses are ineligible to participate if they are eligible for other employer-sponsored coverage. With the spousal surcharge, the employer has a surcharge for spouses eligible for other employer-sponsored coverage.
What is the difference between HIPAA and COBRA “events” in this scenario?
The “carve out” and the “surcharge” have different Health Insurance Portability and Accountability Act (HIPAA) implications. With the carve out, an employee’s spouse is ineligible for coverage. This triggers a HIPAA special enrollment period (SEP), and the spouse’s employer would allow them to enroll in their group plan if the spouse is eligible.
The surcharge does not trigger the same SEP. This means the spouse’s employer would not be required to offer mid-year enrollment in their group health plan. Although the loss of coverage is a qualifying event for HIPAA, a plan change does not qualify for the continued coverage under COBRA.