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Should You Cut Benefits for Spouses Like UPS?

By Brett Snider, Esq. on August 22, 2013 11:20 AM

UPS will be dropping health care coverage for some 15,000 employees' spouses, citing "costs associated with" Obamacare.

United Parcel Service told employees in a July memo that "limiting plan eligibility" is a prudent way to maintain coverage for current employees "now and into the future," especially in light of the Affordable Care Act (aka Obamacare), reports The New York Times.

Even if it's just to save a dime, should your business cut employee benefits?

No Eligibility for Working Spouses

UPS has joined scores of companies that are partly blaming Obamacare for causing them to cut health care benefits.

Like other opponents of the federal healthcare mandate, UPS told workers in a memo that "Since the Affordable Care Act requires employers to provide affordable coverage, we believe [employees' spouses] should be covered by their own employer," reports CBS News. UPS' change is set to take effect in 2014.

While the Affordable Care Act does require employer plans to provide coverage for employees and their dependents, the Internal Revenue Service has proposed that "dependents" include children up to age 26 but not spouses, reports The New York Times.

Obamacare does not require that employer healthcare dependent coverage or family coverage be affordable, however. Companies that wish to keep the plans are not required to make them cheap.

Can Your Business Cut Spousal Coverage?

While UPS will be affected by Obamacare (the company employs nearly 400,000 people, according to CBS News), many small businesses with fewer than 50 full-time employees will not have to comply with the Obamacare employer mandate. For the smallest of small businesses, their healthcare obligations as an employer will not change.

Also, as long as an employee works less than 30 hours per week (i.e., part-time), a business is not required to provide benefits to that employee. That's why some large retailers have chosen to save money on benefits by cutting full-time employees.

Regardless if your small business is subject to the Obamacare mandate to provide minimum healthcare coverage, it is up to each business owner to determine whether spousal coverage is worth keeping. Extra coverage can be more costly to offer and is not required by law, but providing spousal coverage may increase employee loyalty and morale in the long run.

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