Is Obamacare Going to Make Your Spouse a Financial Liability?

With just five weeks and two days left until the state-run exchanges are scheduled to open for business, the reality of health-care reform, and its many unknowns, is beginning to settle in with millions of Americans.

For some, it's a much needed step in the right direction. Those who earn four times or less of the U.S. poverty level will receive some form of financial health insurance subsidy, which will hopefully lead to better preventative care and lifestyle habits for lower-income individuals.

Conversely, upper-income earners and select middle-class individuals who fall outside this bracket may be on the line for higher health insurance costs and could be subject to an additional tax to help pay for the Patient Protection and Affordable Care Act's Medicaid expansion depending on their income.

Many of the pros and cons regarding the PPACA, which is more affably known as Obamacare, boil down to political preferences. But, while we all have our own personal political beliefs, the fact of the matter remains that positives and negatives will rear their head from the implementation of this bill. Earlier this week, we saw one of those negatives hit the forefront in a very public format, and it has pundits again questioning whether Obamacare will strap American spending.

The root of concern
The uproar stems from a bifurcation in implementation dates between the individual mandate and the employer mandate. Originally, the entirety of Obamacare was to be fully implemented on Jan. 1, 2014. However, in early July the Obama administration announced that the employer mandate -- the part of the bill requiring employers to provide health insurance to their full-time workers or face a stiff penalty of $2,000 to $3,000 per employee if their health care costs exceeded 9.5% of their income – would be pushed back a year to Jan. 1, 2015.

The reasoning behind the delay seemed plausible from the Obama administration -- it wanted to see how quickly single payers transitioned into the individual insurance market -- but it also left a potential gap between large employers and individuals that could result in the loss of coverage for perhaps 1 million employees.

Is Obamacare going to make your spouse a liability?
But, it's not just a matter of whether or not employers will drop coverage for current employees; it's about whether employers will wiggle out of their obligation to take care of an employee's spouse.

Under the new bill, which has considerably more encompassing coverage options, many businesses are discovering that the costs of subsidizing their employees are rapidly rising. For businesses that put their employees at the forefront, it hasn't been a big deal. Costco (NASDAQ: COST  ) has long since put the health and well-being of its employees first, and Obamacare is merely an extension of the of same practices and standards it already has in place for full-time and part-time employees. Just last year, Costco announced a partnership with Aetna to create what's called Costco Personal Health Insurance -- essentially a way of getting personal insurance at cheaper prices than the current market rates. As you might have expected, Costco also allows spouses on its Personal Health Insurance plans. Obamacare aside, Costco deserves a pat on the back for its labor practices.

The same can't be said for a number of other businesses, which have resorted to all types of cost-saving methods in recent months. Instead of cutting employees' hours or laying off workers in order to reduce costs, businesses have simply gotten out their axe and told their employees that their spouses will no longer be covered under their new health plan -- or that they'll be forced to pay through the nose to keep that coverage on their significant other.

What brown can do for you (but not your spouse)
United Parcel Service
(NYSE: UPS  ) is bound to tick off their employee base and consumers by announcing this week that it plans to cut spousal health insurance coverage for some 15,000 employees in 2014 because of the added costs of Obamacare. The move is anticipated to save UPS $60 million annually and is being done because UPS feels working spouses should be easily able to obtain health insurance coverage on the individual market. According to USA Today, the move will affect about one-quarter of UPS' workforce.

Yet, if you think that's the only example of this you'd be sorely mistaken. USA Today's parent company, Gannett (NYSE: GCI  ) , has had a spousal surcharge in place for the better part of a decade in cases where the spouse could obtain insurance easily elsewhere (i.e., cases where the spouse also had a job). The thought here is that it could increase even more once the employer mandate goes into full effect.

Instead of surcharges, printing and information technology services provider Xerox (NYSE: XRX  ) goes straight to a penalty if you want to have your husband or wife on your health plan. In 2013, Xerox charged a $1,000 penalty to employees who added a working spouse to their health plan. In 2014, it will be raising this penalty to a whopping $1,500.

A growing reality & its implications
According to a survey conducted by research firm Towers Watson, 4% of employers cut spousal coverage in cases where coverage was similar in the spouse's place of employment. Next year, an additional 8% answered that they would do the same. Added together, we're looking at one-in-eight employers planning to exclude spouses from coverage by 2014.

This shift has two potential implications. First, it's a big boost for WellPoint (NYSE: WLP  ) and other health insurers that have become big players in the individual health insurance market. WellPoint's purchase of Amerigroup for $4.5 billion was made with the expectation that its Blue Shield Blue Cross network was going to be a big beneficiary of the Medicaid expansion (and it certainly should be). However, fewer employer-sponsored spouses could drive these individuals to seek insurance on the state-run health exchanges which would be another big boost for WellPoint. Conversely, it would be a bit of a blow to commercial insurers like CIGNA, which counts on employee plans for a good chunk of its revenue.

The other implication here is that it makes the consumer spending picture very cloudy. At first you wouldn't think that dropping spouses from a company's health plan would have any material impact on the economy, but digging a bit deeper I can see some possible pitfalls. Without spousal coverage, which often comes as a slightly cheaper package, families run the risk of having to spend more in annual costs for similar coverage on the individual market. Sure, it'll save businesses a few dollars, but it's not necessarily going to translate into more full-time jobs or help out families that are in sticker shock from the new health insurance pricing.

Clearly, health care reform is needed giving the rapidly rising costs of medical care and prescription drugs, but I believe we are seeing one of the downsides to this bill beginning to play out: Namely that for some large businesses, a spouse may wind up being considered a financial liability.

Are you still in the dark about how Obamacare might affect you, your family, and your portfolio? The Motley Fool's special report, "Everything You Need to Know About Obamacare," takes a 360-degree look at how the law may impact your taxes, health insurance, and investments. Click here to grab your free copy today.

 


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  • Report this Comment On August 26, 2013, at 1:02 AM, floridavotes wrote:

    Large companies that have been self insured have been doing this for years. This is not a new development.

    Employees that work for two benefit rich companies have had double coverage due to little or no extra expense to the employee.

    The companies are not willing to pay for DOUBLE coverage for those spouses. Cover the kids with either plan that is most beneficial. No brainer.

  • Report this Comment On August 26, 2013, at 9:10 AM, oldforge wrote:

    In addition to floridavotes comment, UPS is not forcing their employees to find spousal coverage on the individual market.

    Only spouses eligible for coverage at their own place of employment are being excluded from UPS coverage. This is a big difference.

  • Report this Comment On August 26, 2013, at 4:01 PM, Booman49 wrote:

    Also to be noted is that if the spouse is not working she will be covered under UPS's plan.

  • Report this Comment On August 26, 2013, at 5:03 PM, TimeRanger wrote:

    This article is full of misleading and inaccurate statements.

  • Report this Comment On August 26, 2013, at 5:12 PM, sagehopper wrote:

    No..Uncle Sam is our only financial liability. my wife and I are fine.

  • Report this Comment On August 26, 2013, at 5:26 PM, Sums29wa wrote:

    Only if your a republican, then you would gladly count your spouse a liability.

  • Report this Comment On August 26, 2013, at 5:30 PM, Sums29wa wrote:

    Also, UPS, not a good place to work.

  • Report this Comment On August 26, 2013, at 5:47 PM, Booman49 wrote:

    Sums29wa.....Is that from experience or hear say?

  • Report this Comment On August 26, 2013, at 5:57 PM, OldVet72 wrote:

    "For some, it's a much needed step in the right direction. Those who earn four times or less of the U.S. poverty level will receive some form of financial health insurance subsidy, which will hopefully lead to better preventative care and lifestyle habits for lower-income individuals."...The key word being "hopefully". The odds of those same people all of a sudden being able to afford to adopt a healthy lifestyle are remote.

  • Report this Comment On August 26, 2013, at 7:14 PM, JePonce wrote:

    Obamacare is the liability.

  • Report this Comment On August 26, 2013, at 7:27 PM, AndaOPH wrote:

    s Obamacare going to make your spouse a liability?

    But, it's not just a matter of whether or not employers will drop coverage for current employees; it's about whether employers will wiggle out of their obligation to take care of an employee's spouse.

    Wiggle OUT!!!!

    Business: I need X. Employee: I can provide X

    Business: I can/ will pay $$. Employee: I accept $$

    There is NO wiggle out of "obligation"!!!

    The wage freeze during WWII allowed companies to pony up benefits. Paying for health insurance is just another form of compensation.

    And PLEASE: access to health insurance does not equate to access to health care. In the US everyone already has access to health care. One can't be turned away from the emergency room.

  • Report this Comment On August 26, 2013, at 7:34 PM, peckbill wrote:

    Do not blame it on Obamacare; it is UPS that is making the decision; the greed one.

  • Report this Comment On August 26, 2013, at 7:57 PM, garysund wrote:

    I am so happy that I have a union contract that is good for another 4 years and medical for my spouse and dependents are fully covered and they can not raise what we are already paying out of pocket. Of course that is all up in the air after four years but at least it gives time while they sort out all of the Obama care issues that are going to pop up.

  • Report this Comment On August 26, 2013, at 8:07 PM, VIRGY90280 wrote:

    Heck with my spouse. My son has been getting Medicare and MediCal (Medicare) for 30 years because my husband died and my son was brain injured. We both worked a total of 60 years.

    In Calif. and most other States in the Union, they require that anyone over 55 y/o needing MediCal who own homes will have to sign over their hard earned Property/s in exchange for MediCal assistance. This is horrible that we (I would also since I am over 55 y/o) must turn over our homes when needing low income medical help just because we are 55 y/o or more and the people who put their homes in another's name or are "refugee's"from another Country like Mexico (from Long Beach Ca. Guidelines): don't have to lose their homes. I have the paperwork we get from Calif. Medi-Cal every 6 months confirming this. My husband and I worked many years to acquire our home sometimes 3 jobs every day and now the Govt. wants Obamacare to mandatorily give us Medi-Cal (Medicaid). They never mention the drawbacks to Medicaid and anyone owning their own homes).

  • Report this Comment On August 26, 2013, at 8:23 PM, doco177 wrote:

    Google.... "Obamacare Flowchart" at Intellectual Takeout .... to see a visual representation of the corrupt mess this really is

    Congress,Muslims, Amish, Native Americans are exempt from mandate and penalties under Obamacare that the rest of us have to pay.

    1. Millions are losing the insurance Obama promised they could keep. Because ObamaCare forces employers to offer expensive Cadillac plans but also offers the option of paying a fine for not providing health insurance that can be cheaper than providing it, between seven and twenty million Americans are likely to lose their health insurance coverage according to the Congressional Budget Office. The original estimate was closer to four million.

    2. The cost of healthcare premiums is about to further skyrocket. Premium costs have already exploded, but that is a slow-motion explosion. In the near future, we could see costs double or worse. Naturally, these costs will hit an already burdened middle class hardest.

    3. Lost jobs. Lost jobs.

    The Federal Reserve's March beige book on economic activity noted that businesses "cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff."

    Consulting firm Adecco found that half of the small businesses it surveyed in January either plan to cut their workforce, not hire new workers, or shift to part-time or temporary help because of ObamaCare.

    4. Doctor shortages that will mean rationing: The healthcare industry is already a bureaucratic quagmire. ObamaCare is about to add steroids. As the profession becomes tyrannized by government, the talented people currently practicing medicine plan to get out sooner than expected. Who knows how many will choose not to get in. Doctor shortages are what lead to the nightmare known as rationed care.

    5. Somewhere around $800 billion in tax increases will hit America's middle class. This added burden will not only further oppress a middle class already reeling from a drop in wages over the last few years, but could damage the overall economy.

    6. Inflation, the cruelest tax on the poor. When businesses get socked with added costs brought about by higher taxes and burdensome government mandates, they pass those cost along to the consumer in the form of higher prices.

    7. Added bureaucracy. Even those Obama lapdogs over at the Washington Post's Wonk Blog are admitting that applying for health care is about to get more burdensome than the byzantine paperwork involved in buying a home.

    8. To cut costs or to avoid having to provide insurance, workers on the economic margins are already losing hours, which means a lower paycheck. There are a million sad stories in ObamaVille; here are just a few of them.

    9. ObamaCare is projected to add $6.2 TRILLION to a deficit the GAO has already declared "unsustainable." That's "trillion" with a "t".

    10. More taxes than currently estimated are likely to hit because of situations like this one.

    Three years ago, Obama, Democrats, and his media lied to us about cutting the cost of health care, being able to keep our insurance, and not taxing the middle class. Today, those lies and what ObamaCare is and will do to the working and middle class are the biggest untold story in America.

    The govt becoming more involved in health care is the reason the costs have increased. So Govt creates a crisis, then provides a solution that comes at the expense of liberty and freedom, costs trillions, and by most accounts won't solve the problem but in fact make it far worse.Corruption, incompetence, disregard of the Constitution, and lying are integral to the way that this country is being run.

    Boycott and Repeal Obamacare...If only a mere 20% of the over 300 million population of the USA boycott Obamacare the government would be overwhelmed to even think they could penalize or mandate every citizen that refused to participate in the most corrupt and unlawful ways which it was passed that circumvented the constitution of the United States.

  • Report this Comment On August 26, 2013, at 8:32 PM, abbybh wrote:

    I work for USPS (37.44 hours a week) and our union only allows benefits to those who work 42 hours a week, as we work 6 days a week. Being employed by the largest employer in the world one would think that they would have an insurance pool set up for "non-career" status employees. What is available is one can not afford - low side $1400. high side $1800. per month. I would have to pay to work there. I am anxious to see the new pricing available October 1st. Some say get a different job. That's what I did when I saw what was happening to the banking business. Glad I had some foresight, at least I have a job. Just don't understand government's way of thinking.

  • Report this Comment On August 26, 2013, at 8:40 PM, SatRDaysChild wrote:

    I wonder why there is NEVER any indication of exactly WHAT the Poverty Level is??? Last time I checked, it was always listed as for a family of four; and I was at least $15. over it! Besides living in a cardboard box on Skid Row, who could actually qualify for the subsidy? I'm grateful that I had the good sense to retire and take my Medicare coverage and RUN! Doctors may hate it, but it just means that they have to do more paperwork...and maybe play golf on the public links, instead of the Country Club (Cue the violins playing "Cry Me a River"...

  • Report this Comment On August 26, 2013, at 9:38 PM, volcan357 wrote:

    I suppose I don't need to worry about Obamacare since I no longer live in the USA.

  • Report this Comment On August 26, 2013, at 9:44 PM, abbybh wrote:

    To doco177 health insurance has skyrocketed for years.

    INSURANCE FACT FLOW CHART

    Price the individuals out -

    1. I had private on two different occasions, both for over 5 years and I never used it not even for the yearly check-ups, I paid cash. The last time was from 1992 to 1997. Every year I received an increase the last year I had to drop as It increased 4 times. I could no longer afford it.

    2. Prior to that the policy I had one for 4 years (and never used). One day I get a letter informing me I failed to disclose a preexisting condition and they put a rider on me. I reviewed the policy and found I had disclosed everything and then some. They took the rider off and admitted to the error. But then 3 months later my policy TRIPLED. They will rider or price me out where i couldn't afford it.

    Controlling Who, Where and When you get treatment -

    1. I worked with a lady that when her husband

    had cancer and the Doctor treatment and place which was not "in net work". Insurance denied,

    family appealed, denied, appealed, denied

    appealed - finally approved, this is good, no

    they buried him the day before.

    2. My Sister's husband heart attack - sent to closest hospital immediate surgery. "out net work" hospital 50% pay, negotiated bill more than once. Got reduced to under $50K started making payments.

    2. Same Sister (a nurse) comes home to help sick family member, not feeling well herself won't see Doctor up here learned her lesson on "out of net work" "can't afford still paying large bill". Sister dies from pneumonia - Insurance won out again.

    HMO's

    The days when we had major medical companies Doctors were happy and they were paid, Patients were happy, Employers were happy.

    1. HMO's come about and tell Doctors what they are worth and what they will pay them.

    2. HMO's make Doctors fight for every dollar

    3. HMO's require Doctors to use unnecessary valuable resources to fight for this dollar

    4. HMO's decide if the Doctors diagnosis is correct and or if the procedure is necessary

    5. Doctors should not have to fight to prove their degree is legitimate and that they know what they are talking about.

    Is there a difference between "Obamacare" and what has been happening to us under the "Insurance Glut"?

    Somehow, someway we need to reign in the insurance companies. If they are making so much money they can afford to get into the financing business i.e. home/car lending then they are making too much (oh, yea this lead to the crash in September when Bush was still in office) and need to cut prices for the people out there fighting everyday to take care of their families.

  • Report this Comment On August 26, 2013, at 9:52 PM, ETFsRule wrote:

    Let's all worry about this federal health insurance system!! Even though every developed nation in the entire world already has a federal health insurance system, and they all work just fine! Everyone freak out! Oh my god!!!

  • Report this Comment On August 26, 2013, at 10:42 PM, mwr9993 wrote:

    I don't know why many of you think that a change in health care isn't necessary!

    I served this country for over 8 yrs active duty and added reserve time to get a retirement when I turn 60! Worked in the retail arena up to management till getting deployed the first time to Afghanistan. Nothing was normal after that.

    The only health insurance offered, that I supposedly earned from military, cost $ 969 for my spouse because I would have to be on the insurance policy. TriCare.

    I have a disability, as does my wife, but she doesn't qualify for medicare, but I do. That doesn't help us when she has a medical problem and I can't afford the 40k bill or can't get it paid by someone else because we are limited by my earned stuff and her inability to get anything or work a real job.

    The Affordable Care Act (ACA), ObamaCare if you will, would allow a different scenario for people like my wife and I, with limited income and resource. We are just in that grey area that doesn't serve anything but to bankrupt good people.

    There is a big need to have change when most of the developed world pays less for health care than we do! Get this, those other countries have even better health that we do! You know there is something wrong if the political machine continues to tell you that the things that could help you are bad for you, even if you earned it!

  • Report this Comment On August 27, 2013, at 12:22 AM, Grandmabooboo wrote:

    Why are all these people pretending that this is something "new" associated to "Obamacare"? It's NOT.

    All the way back to the early 1980's, I had to PROVE that my children were my "responsibility" to insure by providing both court documents, and IRS returns showing that I had provided MORE than 51% of their support and could therefore claim them as "dependents".

    It NEVER failed on any occasion when my family had to go to a hospital that it took MONTHS to get it through those idiots heads that COBRA did NOT apply because my husband had NO health insurance. They INSISTED on submitting claims in his name, his social security number...to be rejected time after time...all the while DEMANDING that I provide them with HIS insurance info because he was the male, and he was older....and it was a criminal offense for the wife to carry the family's health insurance.

    There have ALWAYS been issues with insurance in regard to proving that the "employee" is legally responsible for a dependent by IRS standards.

  • Report this Comment On August 27, 2013, at 4:39 AM, zapped70 wrote:

    Ironic isnt it?

    Obama and his administration buy off gay people by allowing them to get married legally. One of their biggest complains was not being able to have coverage under their partners health care.

    Now they still cant be under their partners health care.

    Wake up people! NOTHING in life is free and Obama is giving away nothing but lies and false promises. Defund the train wreck NOW before it destroys an already struggling economy.

  • Report this Comment On August 27, 2013, at 2:15 PM, Jimmy7855 wrote:

    UPS did this to prove a point to the union employees. Who are blocking the contract rectification over benefits. This change as well as the $150 surcharge for tobacco users only apply the the management and non union employees. The timing of these changes and the issues in the current contract talks prove the point. Changes in non union benefits have allows been announced closer to the benefits election period.

  • Report this Comment On October 17, 2013, at 10:41 AM, iPhoned wrote:

    " Costco (NASDAQ: COST ) has long since put the health and well-being of its employees first, and Obamacare is merely an extension of the of same practices and standards it already has in place for full-time and part-time employees"

    there's your sign...

    Lifelong Democrat Obamabot fools

    King O Putting health and well being first costs $600+ a month for a starving immigrant artist in Berkeley, CA!

  • Report this Comment On November 07, 2013, at 7:36 AM, meeksp wrote:

    Hi everyone i will never forget the help the Mother Esango Shrine render to me in my marital life. i have been married for 4 years now and my husband and i love each other very dearly . after 3 years of our marriage my husband suddenly change he was having an affair with a lady outside,i notice it then i was praying for divine intervention the thing became more serious i told my pastor about it we prayed but nothing happen. my husband just came home one day he pick up his things and left me and the kids to his mistress outside at this time i was confuse not knowing what to do again because i have lost my husband and my marriage too. i was just checking my mails in the office when i saw someone sharing her testimony on how the Mother Esango help her out with her marital problems so i contacted the email of Mother Esango. I told her my problem and i was told to be calm that i have come to the right place that i should fill some information concerning my self i did after some time she called me again congratulating me that my problems will be solve within 13days. She told me what went wrong with my husband and how it happen. that they will restored my marriage but i will make a free donation to their Shrine anything my heart told me. to my greatest surprise my husband came to my office begging me on his knees that i should find a place in my heart to forgive him i quickly ask him up that i have forgiven him.friends your case is not too hard why don't you give Mother Esango a try she powewerful and kind. i know she will also bring back your husband. i promise to keep sharing her good work any time i'm on the internet. when ever i come accros a forum like this, i always share the testimony. contact her via esangoshrine@gmail.com

  • Report this Comment On November 07, 2013, at 7:43 AM, meeksp wrote:

    Hi everyone i will never forget the help the Mother Esango Shrine render to me in my marital life. i have been married for 4 years now and my husband and i love each other very dearly . after 3 years of our marriage my husband suddenly change he was having an affair with a lady outside,i notice it then i was praying for divine intervention the thing became more serious i told my pastor about it we prayed but nothing happen. my husband just came home one day he pick up his things and left me and the kids to his mistress outside at this time i was confuse not knowing what to do again because i have lost my husband and my marriage too. i was just checking my mails in the office when i saw someone sharing her testimony on how the Mother Esango help her out with her marital problems so i contacted the email of Mother Esango. I told her my problem and i was told to be calm that i have come to the right place that i should fill some information concerning my self i did after some time she called me again congratulating me that my problems will be solve within 13days. She told me what went wrong with my husband and how it happen. that they will restored my marriage but i will make a free donation to their Shrine anything my heart told me. to my greatest surprise my husband came to my office begging me on his knees that i should find a place in my heart to forgive him i quickly ask him up that i have forgiven him.friends your case is not too hard why don't you give Mother Esango a try she powewerful and kind. i know she will also bring back your husband. i promise to keep sharing her good work any time i'm on the internet. when ever i come accros a forum like this, i always share the testimony. contact her via esangoshrine@gmail.com

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