Yet, if you think that’s the only example of this you’d be sorely mistaken. USA Today‘s parent company, Gannett Co., Inc. (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 Corporation (NYSE:XRX) goes straight to a penalty if you want to have your husband or wife on your health plan. In 2013, Xerox Corporation (NYSE:XRX) 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, Inc. (NYSE:WLP) and other health insurers that have become big players in the individual health insurance market. WellPoint, Inc. (NYSE:WLP)’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, Inc. (NYSE:WLP). 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.
The article Is Obamacare Going to Make Your Spouse a Financial Liability? originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Costco and WellPoint. It also recommends United Parcel Service.
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