Q. My husband works for a much larger company than I do. I have always been covered under his plan because it is more affordable than the one offered by my smaller company. We just received a letter from his company stating that beginning next year, if I have access to my own health insurance I can no longer be covered under his insurance. Is this legal?
A. Yes, it is legal.1 The ACA requires employers with 50 or more workers to offer coverage to employees and their children (until age 26). However, there is no requirement that employers of any size offer health benefits to employees’ spouses.
Most employers that offer health benefits do voluntarily offer spousal coverage: According to a 2024 KFF analysis, almost all employers that offer health benefits extend that offer to employees’ spouses (95% of those with 10-49 employees, and 99% of larger businesses).2
However, among employers with at least 200 employees, 10% do not allow employees’ spouses to enroll if they have a coverage offer from their own employer, and 13% place conditions on spouses in that scenario, such as limiting their plan options or imposing a surcharge if they choose to enroll as a spouse instead of enrolling in their own employer’s plan.2 Employers can also impose a rule clarifying that spouses can be covered but if they have an offer of coverage from their own employer they must also enroll in that plan (thus making their own coverage primary and the spousal coverage secondary).
What is the working spouse rule?
When employers condition a spousal coverage offer on whether the spouse has access to coverage from their own employer, this is known as a working spouse rule. To be clear, this “rule” is established by the employer, as federal rules do not place any requirements on employers when it comes to offering health benefits to spouses (some states have rules preventing employment discrimination based on marital status, and some of these rules might prohibit working spouse rules for employers that use fully-insured health insurance.3 State rules do not apply to self-insured health plans, which cover the majority of the people with employer-sponsored health insurance in the U.S.).
So in general, employers that offer spousal health benefits do so of their own volition, and are free to impose a working spouse rule if they choose to do so. And limiting spousal enrollment or adding a surcharge when the spouse has access to their own coverage has been gaining popularity among employers over the last several years, as a cost-saving measure.3
Do I have any other alternatives?
It’s likely that the coverage offered by your employer will be your best option, even if it’s more expensive than the coverage you’ve had under your husband’s employer. But depending on the circumstances, you might choose to purchase Marketplace/exchange coverage instead.
Since you’ll no longer have access to coverage through your husband’s job, the affordability test for your coverage will depend on what it costs to obtain coverage through your own job. Assuming the portion of the premium that you’re required to pay (for yourself only) doesn’t exceed 8.39% of your household income in 2024,4 (9.02% in 20255) and assuming the coverage your employer offers pays for at least 60% of the average enrollee’s medical costs and provides “substantial coverage” for inpatient and physician care (meaning it meets minimum value requirements), you wouldn’t be eligible for a subsidy to purchase individual health insurance in the exchange.
But if the coverage your employer offers doesn’t meet the tests for affordability and minimum value, you could be eligible to receive a subsidy to offset the cost of health insurance purchased through the exchange, as long as you’re a legal U.S. resident and you qualify for a subsidy based on household income (note that you might still end up being ineligible for a subsidy, since the calculation will be based on whether or not the cost of the benchmark plan for just your coverage exceeds a specified percentage of your entire household’s income, including the income your husband earns).
Footnotes
- ”Spousal Surcharges and Carve-Outs” McGriff Employee Benefit Solutions. 2022 ⤶
- ”Employer Health Benefits, 2024 Annual Survey” KFF.org. Oct. 9, 2024 ⤶ ⤶
- ”Spousal Surcharges and Carve-Outs” McGriff Employee Benefit Solutions. 2022. Accessed Nov. 13, 2024 ⤶ ⤶
- “Revenue Procedure 2023-29” Internal Revenue Service. Accessed Feb. 16, 2024. ⤶
- “Revenue Procedure 2024-35”. Internal Revenue Service. Accessed Oct. 28, 2024. ⤶
