U.Va. follows growing national trend in eliminating coverage for working spouses

Published September 27, 2013 by Robert Powell, III

The University of Virginia and United Parcel Service appear to be on the same page regarding health-care coverage for the working spouses of employees.

On Aug. 20, USA Today reported that UPS was discontinuing coverage for 15,000 spouses who can obtain health-care insurance through their jobs.

One day later, U.Va. announced a similar decision affecting working spouses of its 13,600 employees.

The cause for change in each case is rising health-care costs, with the Affordable Care Act (ACA or “Obamacare”) getting some of the blame.

In a memo to employees, UPS said costs associated with Obamacare, combined with current increases in health costs, “make it increasingly difficult to continue providing the same level of health-care benefits to our employees at an affordable cost.”

By excluding the spouses of nonunion workers, the company expects to save $60 million a year.

The move by Atlanta-based UPS adds momentum to a growing trend among major employers to exclude working spouses from their health plan or charge extra for coverage.

Meanwhile, medical claims in U.Va.’s self-funded health plan rose 28 percent in the past four years, from $99 million in 2008 to $127 million in 2012. “High” claims of more than $100,000 for a single health plan participant increased from 44 in 2008 to 104 last year.

The university expects ACA to add $7.3 million to the cost of its health plan next year. That cost is expected to grow in future years because of excise taxes on “Cadillac” health plans. In 2018, a 40 percent tax would apply to the cost of an individual plan with average premiums per employee of more than $10,200, or $27,500 for a family plan.

U.Va. officials say that, if it had not made adjustments, employee premiums would have increased 12 percent to 13 percent this year.

Starting Jan. 1, spouses will not be eligible for the U.Va. health plan if they have access to “affordable health care that provides minimum value” as defined by ACA.

To keep a spouse on the U.Va. plan, an employee must submit an affidavit during the open enrollment period (Oct. 7 to Oct. 25) showing that the spouse does not have access to affordable care through another employer.

The U.Va. health plan will continue to cover employees’ children.