UPS cuts health coverage for spouses with insurance

An unidentified driver heads away in his van after dropping packages at stores in east Denver in this file photo.

Of the approximately 33,000 spouses who are currently covered by UPS's health plan, about 15,000 will be thrown off. The company employs about 77,000 people.

NEW YORK — United Parcel Service Inc. has told non-union employees their spouses will no longer be eligible for company-sponsored health insurance if they can get coverage through their own jobs, blaming the decision on President Barack Obama's healthcare reform law.

In a memo to employees reported on Wednesday by Kaiser Health News and USA Today, the package-delivery giant said that of the approximately 33,000 spouses who are currently covered by UPS's health plan, about 15,000 will be thrown off. The company employs about 77,000 people.

The company said in the memo that it considered increasing the premium paid by its employees to help retain spousal coverage, but "we believe your spouse should be covered by their own employer," because "the Affordable Care Act requires employers to provide affordable coverage."

The ACA is the 2010 healthcare reform law often called Obamacare. None of its provisions require people to buy insurance offered by their own employer rather than a spouse's. Nor does it require large employers to offer spousal coverage.

Related: Obamacare enrollment begins among premium hikes

UPS said it expects the cost of covering non-union employees to rise by 11.25 percent, including a 7.25 increase in medical expenses and a 4 percent increase attributed to the costs of implementing Obamacare, such as a requirement to remove annual limits on benefits.

In the memo, the company cited market data showing that 35 percent of other companies "plan to exclude working spouses eligible for their own employer's coverage in 2014." The memo did not provide the source of the data and a UPS spokesperson was not immediately available for comment.

According to a survey released in March by consultant Towers Watson and the National Business Group on Health, 4 percent of large employers excluded spouses from their health plan in 2013 if they could buy coverage where they work, and 8 percent more planned to do so for 2014.

A more common way for employers to off-load the cost of health insurance to workers and dissuade them from covering dependents is to increase employees' share of the cost for spouse and family coverage at a higher rate than for worker-only plans. According to Towers Watson, 42 percent of large employers did so in 2013 and another 19 percent plan to next year.

This year, one-fifth of large employers levy "spousal surcharges" when the wife or husband has access to other coverage, and another 13 percent plan to in 2014.

UPS spouses who are not employed, whose job does not offer health insurance, or who are covered by Medicare will be allowed to stay on the UPS plan. The change will operate on an honor system, the memo to employees implies, saying they will be asked "to certify the eligibility" of spouses and other dependents.

UPS is not raising the premiums employees pay, it said, and workers whose spouse is ineligible will pay UPS an average of $1,600 less in 2014 than this year.

Last month UPS reported earnings of $1.07 billion, or $1.13 a share, in the second quarter, on revenue of $13.51 billion.

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