Dropping Spousal Health Benefits May Not Be The Best Monetary Move

12 May

Employers may not save money by cutting spousal benefits.

As employers continue to look for ways to limit their healthcare costs, many are choosing to eliminate health benefits for workers' spouses. The thought is that doing so would save the company money without eradicating employee perks. 

However, Human Resource Executive (HRE) Online suggested that HR professionals may want to rethink this employee benefits management strategy and use human resource management system software to truly understand how much paying for the healthcare of workers' spouses costs the company.

According to a recent report from the Employee Benefit Research Institute, employers tend to spend less on spouses than on their workers, despite spouses being more expensive. Using 2011 data from Truven Health Analytics, EBRI estimated that employers spend an average of $4,453 on employer health benefits, with total health coverage costing an average of $5,430 per worker. For spouses, however, employers only spend $4,095 on average, despite the total cost of spousal health coverage being $6,609. The study also found that there is a difference in cost between working and nonworking spouses. It concluded that not covering spouses may not be monetarily advantageous for employers.

In addition, Workforce noted it may not be a good idea for employers to cut spousal benefits in terms of talent acquisition and recruitment. Employers that are looking to hire the best performers may see themselves out of luck if talent wants spousal benefits. Paul Fronstin, director of the health research and education program at EBRI, told HRE Online employers and HR professionals should ask themselves why they are offering spousal benefits.

"That's the key question," Fronstin said. "Is it to keep them competitive in the labor market? Is there a concern that they are not going to get the right employees if they don't have a successful benefits program by dropping spousal coverage? That's the real cost of business."

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