UPS to End Health Insurance Coverage for Spouses of Some Employees

DALLAS (AP) -- United Parcel Service plans to drop health-insurance benefits for working spouses of nonunion employees if they can get coverage elsewhere. It blames the change partly on the new health care law.

UPS estimates that 15,000 of the 33,000 spouses it covers will be dropped. The change is scheduled to take effect Jan. 1 for spouses of U.S. employees.

The worldwide parcel-delivery company says it's just going with the crowd. UPS cited a benefits consultant's survey that found more companies are planning on restricting benefits for working spouses.

UPS said it was making the change because of rising health care costs and the 2010 law championed by President Barack Obama. The company said that it considered letting employees pay extra to cover their working spouses but decided that would be difficult to do.

"Since the Affordable Care Act requires employers to provide affordable coverage, we believe your spouse should be covered by their own employer -- just as UPS has a responsibility to offer coverage to you," the company said in a memo to employees.

According to benefits consultant Mercer LLC, relatively few large companies exclude coverage for spouses who have the option of other employer coverage.

Mercer said that in 2012, just 6% of companies with 500 or more employees excluded such spouses, although that was double the percentage in 2008. It said another 6% levied a surcharge to cover those spouses.

"Employers are thinking about it because (health insurance) costs are continuing to go up," said Mercer partner Joan Smyth. "They're trying to walk a fine line between being fair to their employees but also being fiscally responsible."

Smyth said employers are waiting to see whether spouses can find coverage from public insurance exchanges to be created under the health law. Other provisions of the law, such as a per-participant fee to subsidize premiums for high-cost people in the individual-policy market, encourage employers to reduce the number of people they cover, she said.

Paul Fronstin, a senior research associate at the Employee Benefit Research Institute, said that the percentage of employers booting working spouses off plans is still small; it's more common to simply add a surcharge for insuring them.

"But trends start with small numbers," he said. "There's a herd mentality. When you have a big employer like UPS do this, it's easier for other employers to do the same thing."

In explaining the change to employees, UPS cited a survey by consultant Towers Watson. That firm surveyed 583 employers and reported growing interest in reducing coverage for working spouses. It said 4% already exclude spouses who can get coverage through their own employer and another 8% plan that in 2014. Many more -- 20% now and rising to 33% next year -- impose a surcharge for covering that same working spouse.

Andy McGowan, a UPS spokesman, said the change was part of the company's effort to keep health-insurance premiums at or below current levels for a "significant" number of employees. He said the company's premiums have risen sharply in recent years.

UPS told employees that spouses will no longer be eligible for physical and mental health benefits and prescription-drug coverage. "However, you may enroll her in dental, vision and supplemental benefits such as life insurance" even if the spouse's employer provides those, UPS told workers. It added that spouses eligible for Medicare won't be excluded from coverage.

The change also won't affect UPS' union workers, many of them represented by the Teamsters. Their health benefits are spelled out in labor contracts.

The new policy will produce one benefit for the nonunion employees: Those whose spouses lose UPS coverage will see their share of their insurance decline. The company said it could be almost $1,600 for some workers.

The UPS change was first reported by Kaiser Health News and USATODAY.

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  • Report this Comment On August 23, 2013, at 11:50 AM, oldpbass wrote:

    Many, many employers are begging and pleading for a "huge" reunionization movement in this country. Humans can only be pushed so far---and pushed they are!

  • Report this Comment On August 23, 2013, at 12:50 PM, mihalikm wrote:

    As always, it's informative to look behind an action - what's the motivator or predisposition? Truly financially motivated or otherwise?

    So, went to the UPS website. And, then to Opensecrets.org and then finance.yahoo.com to gain some insights.

    What I found provides insight into this action and leads one to believe this has much less to do with 'cost' than it does with the CEO's, D. Scott Davis, political affiliations.

    Since D. Scott Davis has joined UPS, serving as CFO and CEO, UPS has given up to 80% of it's political contributions to the GOP party. Not surprisingly, we also find that when compared to its major competitor, FedEx, FedEx has consistently outperformed UPS in the stock market. It seems to me D. Scott Davis political leanings and management is more responsible for his position on healthcare for employees than anything else.

    Political contributions link: http://www.opensecrets.org/orgs/totals.php?id=D000000081&amp...

    Ironically, in opening remarks, Davis gave in 2011 at the UPS Healthcare Forum he stated "The Affordable Care Act improved access to healthcare, which is important, but didn't do enough to address cost and quality. The hope was that this legislation would provide greater certainty, but there is as much uncertainty in healthcare as ever."

  • Report this Comment On August 23, 2013, at 3:11 PM, sciencedave wrote:

    Ultimately this may be a zero sum effect. They will cut coverage of some spouses of employees but gain coverage of some employees who were covered previously at other companies under their spouses....as long as the other companies act similarly. No one seems to mention this.

  • Report this Comment On August 23, 2013, at 6:07 PM, oldpbass wrote:

    And the unemployed housewife??

  • Report this Comment On August 24, 2013, at 5:10 PM, valleygirl7 wrote:

    Unemployed housewife - Non employed spouses stay on their plan. get insurance thru the new state exchanges - the employed spouse can pay for it and may even get a subsidy to help pay for it.

    This news is NO BIG DEAL. If a spouse has coverage at her employer, she should take that or go to the exchange. What the UPS employee saves may pay for the exchange plan premium. I think UPS is doing good by allowing working spouses to stay on their dental plan.

  • Report this Comment On August 24, 2013, at 5:12 PM, valleygirl7 wrote:

    Meant to delete "non employed spouse stays on their plan" - please disregard.

  • Report this Comment On August 25, 2013, at 9:25 AM, Mathman6577 wrote:

    I love how the left-wing apologists always blame companies for the actions they have to take because of political decisions made by people who don't understand business or capitalism. The bottom line is the pols need to stay out of private business.

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