Compliance Q&A: Limiting Coverage of Employees’ Spouses

Medical coverage is expensive, and some employers try to limit the number of non-employee individuals enrolled in their group health plan in order to control costs. One of the more common ways to do this is by implementing a spousal surcharge, making it more attractive for spouses to enroll in another plan, such as one sponsored by their own employer. Other employers structure their plan with a spousal carve-out. While both solutions are legally permissible, there are a variety of considerations that plan sponsors should keep in mind when deciding whether to implement a spousal surcharge or carve-out.