At this point, everyone knows the Affordable Care Act (ACA) requires all employers with 50 or more full-time equivalent (FTE) employees to offer affordable coverage to their workforce. This requirement is called the employer mandate.
What’s less clear for some employers is to whom the coverage must be extended. Do employers have to offer family health insurance coverage? Dependent health insurance? What about coverage for spouses? The answer is pretty straightforward, so let’s dive right in and clear up all that confusion.
ACA Requirements for Employers
The ACA requires that applicable large employers (ALEs) offer affordable coverage to their full-time employees and their dependents up to age 26. However, the law makes no requirement for spousal coverage, nor does it mandate that employers pay for any portion of the premium for dependents.
So in short — employers are not required to offer family health insurance. That being said, many employers choose to offer coverage for spouses and families, regardless of whether dependents are older or younger than 26 years of age. In addition, most choose to subsidize a portion of the premium as well.
One trend picking up steam in the past decade is to only offer spousal coverage if the spouse isn’t able to obtain health insurance through his or her own employer (or if the spouse doesn’t work).
Another common practice is for an employer to levy an additional surcharge for spouses who can obtain insurance through their own employers, but prefer to be on their spouses’ insurance instead. The reasons for doing so are often wide and varied. Nevertheless, the surcharge is often relatively minimal — perhaps around $100.
What Do Employers Typically Contribute to Health Insurance?
While many employers choose to offer spousal and family health insurance, most of them opt to pay a smaller portion of the premium. According to the 2017 Kaiser Family Foundation’s Health Benefits Survey, employers contribute an average of 82 percent of the premium for self-only coverage, but only 70 percent of the premium for family coverage.
The study doesn’t get into the breakdown of employer versus employee contributions for employee plus spouse, nor employee plus dependent coverage, but it’s also common for employers to contribute a smaller percentage of those premiums as well. If you’re looking for an average contribution to those plans, it’s a safe bet to stick between 70 and 82 percent.
Finding the Right Solution
Regardless of the health insurance you choose to offer, it’s most important that you find a solution that works for your business and your budget — whether that means including spouses or not, with or without an additional surcharge.
Remember that the law requires businesses employing at least 50 FTEs to offer dependent coverage up to the age of 26, so be sure to work with your employee benefits broker to find affordable healthcare options in your area. And if you do choose to offer family health insurance, it’s normal, acceptable, and expected for employers to pay for a smaller percentage of the premium than with self-only coverage.
How We Got To Now
Interested in learning more about healthcare in America (both past and present) and how we got to where we are today? Download our eBook, The History of Employer-Sponsored Healthcare. Here, we discuss the on-going debate regarding the impact of the ACA's employer mandate. It also takes you through a quick look at the historical timeline of employer-sponsored healthcare, providing context for the state of American healthcare as it exists today.
Do you offer family health insurance to your workforce? How do you handle premium differentials and/or surcharges? Leave us a comment below or contact us. We’d love to help you find solutions that work for everyone!