UPS Drops Health Care for Some Spouses, Blames Obamacare

Photo (cc) by schnaars

The company that claims to love logistics can’t figure out how to pay health care benefits for some of the spouses of its employees anymore.

UPS will keep employee spouses off the company health care plan if they are eligible for plans from their own employers. It’s partly Obamacare’s fault, UPS says. From Kaiser Health News:

Rising medical costs, “combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost,” UPS said in a memo to employees.

UPS’ memo says it’s far from alone. “Based on market data, 35 percent of those companies [UPS studied] plan to exclude working spouses eligible for their own employer’s coverage in 2014,” it says. Some require an extra fee to cover spouses, but don’t deny coverage, Kaiser says.

Others suggest the dropping of coverage for employee spouses is not nearly as widespread, according to the Kaiser report:

  • “We don’t see a lot of that out there, but more than we used to,” Edward Fensholt, a senior vice president at insurance broker Lockton Cos., told Kaiser.
  • According to a study conducted by Towers Watson, only 4 percent of large employers excluded spouses this year, while another 8 percent plan to next year.
  • The nonpartisan Congressional Budget Office projected that health care reform would have a negligible effect on premiums for large employers.

UPS’ decision, which takes effect in 2014, will exclude about 15,000 working spouses who have other options for getting coverage, and save about $60 million a year, UPS says. It will allow unemployed spouses and those whose employers don’t offer coverage to remain on the plan.

Analysts suggest the move has little to do with Obamacare and is actually just part of a long-term trend of corporations to trim health care benefits, Kaiser says. The company earned $807 million last year on revenue of $54.1 billion.

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