Spousal coverage: Why so confusing?

Question:

Why is there so much confusion over coverage for spouses?

Answer:

For businesses that fit the Affordable Care Act’s definition of an Applicable Large Employer, there is no risk of a compliance payment when what is offered for “family coverage” does not include a full-time employee’s wife or husband.

ACA requirements for dependent coverage do not extend to spouses – only to children younger than 26.

This narrowing of what’s deemed a family plan is seen as one of the potholes in the ACA.

A stay-at-home parent may not be offered coverage through their spouse’s employer and, depending on the quality of the plan that was offered to their spouse, may not be able to obtain subsidized coverage through an exchange.

Among the family plans that an employer can offer, there can be compliant health plans that either exclude spouses altogether or which allow spouses to be covered only if certain conditions are met. An example of a such a condition is the spouse certifying that they are ineligible for coverage from their employer.

To document conditional offers for Tax Year 2016 reporting, the IRS has added two codes to the array that employers can use to fill out Line 14 of Form 1095-C. Both codes – 1J and 1K – center on conditional coverage for spouses.

Cautionary note

Before eliminating spouses from coverage options, employers should work with their benefits broker to make sure their state does not require this coverage to be in place.

 

This Q&A was first published by ACA Insights' Helen Karakoudas on September 28, 2016 in a LinkedIn Pulse article titled "In the world of ACA compliance, every day should be Ask a Stupid Question Day."