United Parcel Service has told its white-collar employees that it will stop providing health care coverage to their spouses who can obtain coverage through their own employers, joining an increasing number of companies restricting or eliminating spousal health benefits.
UPS, the world's largest package delivery company, said its decision was prompted in part by "costs associated with" the federal health care law commonly called Obamacare. But several health care experts said they believed that the company was motivated by a desire to hold down health care costs, rather than because of cost increases under the law.
In a memo addressed to employees, UPS said, "Limiting plan eligibility is one way to manage ongoing health care costs, now and into the future, so that we can continue to provide affordable coverage for our employees."
The memo also estimated that about 33,000 spouses were covered under its insurance plan for white-collar employees, and that "about 15,000 of these would have health care coverage available through their own employers."
In explaining its move -- first reported by Kaiser Health News and USA Today -- UPS told employees, "Since the Affordable Care Act requires employers to provide affordable coverage, we believe your spouse should be covered by their own employer -- just as UPS has a responsibility to offer coverage to you, our employee."
"In an effort to maintain premiums at or below current cost," UPS spokesman Andrew McGowan said, "UPS made a change that affects a limited number of employees."
Large employers like Xerox and Teva Pharmaceuticals already impose surcharges for spousal coverage. And some cities, such as Terre Haute, Ind., decided to follow what many private corporations were doing, adopting a "spousal carve-out" so working spouses would not be covered under its health plans.
Limits on coverage are occurring as some cities and companies also are considering changes to coverage for retirees younger than 65 and ineligible for Medicare, who might be shifted to the health insurance exchanges being established in states under the Obama health care law.
Although the percentage of employers adopting changes in policies remains in the single digits, it is growing. According to a corporate survey by the Mercer consulting firm, 6 percent of firms with 500 or more employees excluded coverage for spouses in 2012 if their spouses could obtain coverage through their own employer. That is double the percentage in 2008, Mercer found.
Mercer's survey also found that 6 percent of employers required a surcharge for workers who keep spouses on their health coverage, even though their spouses could obtain coverage from their own employer. A Towers Watson survey found that 33 percent of large employers said they would impose such a surcharge by 2015.
The new UPS policy does not apply to children of those employees. Nor does it affect the company's 250,000 unionized workers, who belong to the International Brotherhood of Teamsters. At the end of 2012, the company had around 399,000 employees.
Several health care experts said companies were taking these moves partly because the federal health care law does not require employers to provide spousal coverage, but does require them to offer it to employees and their children. UPS made clear that it would continue to provide coverage to spouses who did not have it through another employer.