What Can We Do About Spousal Benefits Costing 40% More?

Internal audits of benefits policies show spousal (or domestic partner) coverage costs employers up to 40% more than coverage for the employee. This revelation could inspire businesses to make two very bad decisions: hire talent based on employee marital status and/or, disproportionately raise benefit rates for families versus singles.

Spousal coverage is costly because utilization is high, but the explanations vary. On a national level, there are more women than men enrolled as spouses on employee benefits plans. Overall, women utilize health benefits to the tune of 31% more than men. With the average cost of a routine pregnancy being $7,400, maternity plays a major role in the cost discrepancy. There are other factors as well. The Wall Street Journal suggests women who work part-time or are stay-at-home spouses, are more likely to utilize health benefits.  Finally, many of the largest claimants are spouses who are unable to work due to health reasons.

While speculation for these causes exists, the usage and cost trends are real. Is there a solution? We say, YES!

Skin in the Game

By bringing spouses into the benefits conversation employers can yield smarter consumers who are more connected to the company.  This can potentially lead to a reduction in benefits utilization and lower employee turnover. Here’s how:

•  Incentive-Based Deductible – Parker Smith & Feek, as well as some of our clients, have deliberately chosen a high deductible policy with an employer payback program. The payback program is then incentivized, based on participation in a wellness program. The program still retains a cap on how much the employee pays. Not only does this strategy lower premiums, it can curtail frivolous usage of benefits.
• Smart Shopping – With options of a Health Reimbursement or a Health Savings plan, our employees are incented to ask about cost and quality when they are “spending their own money”.
• Prescriptions – Shopping makes sense! Even with co-pay plans, pharmaceutical prices vary from one drugstore to the next. Many times generics are cheaper at a major chain like Target or Walmart. (see below)
• Communication – Include spouses in non-confidential corporate correspondence, such as HR newsletters and other email blasts to employees about their benefits.
• Wellness – Include spouses in the wellness program and invite them to participate in a wellness committee. They can be involved in coordinating events, and participate in the overall wellness of their family and the company. According to a study published in the Health Affairs Journal entitled Workplace Wellness Programs Can Generate Savings, medical costs fall by about $3.27 for every dollar spent on wellness programs and absenteeism costs fall by about $2.73 for every dollar spent.
• Access to the Intranet – Many company intranet portals include benefits forms and information which is accessible only by employees, not spouses. Spouse access to the benefits section of your intranet can improve your service and employee satisfaction.

Company culture is a great source of pride at Parker, Smith & Feek. Our employees’ spouses are encouraged to participate in our wellness and philanthropic activities. It is our belief that involving the spouse in the benefits process and programs helps reduce cost and increase employee retention. We’ve seen some excellent results. We can use our experience to help you tailor a program for your employees.

Please click on the attachment below to view Pharmaceutical pdf. 

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