Tuesday, August 27, 2013

Today's Obamacare--UPS Drops Coverage for Spouses

UPS announced that it would be dropping coverage for 15,000 spouses under its health plan.  A bit cryptically, UPS's announcement indicated that Obamacare (aka PPACA) was a factor in the decision.

It's not clear to me how Obamacare affects this decision.  The IRS regulation detailing the employer mandate requires large employers like UPS to offer health insurance to employees and dependents.  The regulation does not require companies to offer insurance to spouses, but does not forbid them from doing so.  So what gives?

There are a few factors which could be at play, which we cover in detail in The Small Business Guide to Obamacare.  Paradoxically, UPS may honestly believe that the spouses are better off without the offer of insurance.  If someone is offered insurance through an employer, that person is ineligible for subsidies on the Obamacare exchanges.  A spouse offered an expensive UPS policy, therefore, would be denied a cheaper subsidized policy on the exchanges.  A UPS spouse might be better off getting a policy on the exchange, or even Medicaid, than accepting the UPS policy.

Another possibility is that Obamacare has many expensive mandates.  One of the freedoms it allows is the choice to offer or not offer health insurance to spouses.  If the only way to save money is to drop coverage for spouses, then a company seeking to save money has little choice but to do so.

That's speculation, but at least it's informed speculation.  My book will inform you about how to make just these kinds of decisions.  If you're an employer worried the law could wreck your business or just interested in Obamacare, you need to read the Small Business Guide to Obamacare.

Now, around the Today's Obamacare world.

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