As Health-Care Costs Rise, Paying More To Insure the Family

By Anna Wilde Mathews

It’s open-enrollment time for workplace health benefits, and the big trend is no surprise, as I write in today’s Healthy Consumer column. We will all be spending more on our coverage. Workers’ costs are expected to rise about 10%, to a total of $4023 in premiums and out-of-pocket costs in 2010, according to benefits consulting firm Hewitt Associates.

But people who have family members on their employer health plans may find themselves digging even deeper into their pockets. Benefitfocus Inc., which provides benefits software to more than 300,000 employers, says around a third of them are trying to trim spending on dependents. The tactics include audits to root out dependents who don’t qualify for the plan – not a new strategy, but becoming far more common. Spousal surcharges, in which a worker pays more to cover a spouse who has another potential source of health insurance, are also being used by a share of employers. And some are cutting back how much they contribute to family coverage.

Company officials told me they had a lot of good reasons for their focus on family plan expenses. Mark Wilson, the chief executive of Kimley-Horn and Associates Inc., said the engineering and planning firm’s rich benefits were luring family members who had other options, adding to Kimley-Horn’s costs. He felt he was “subsidizing…other companies.” An official at another company told me it was “making a concerted effort to widen that gap and make family coverage more expensive than individual coverage…we have our first allegiance to employees, but not as much to their dependents, so if you are going to put dependents on, you are going to bear more of the costs.”

At the extreme, some employers don’t spend any money on covering workers’ dependents. They give the same amount of money to each employee, whether the person has children and a spouse to insure or not. The employee can pay to add others. One teacher I interviewed found it cheaper to buy individual coverage for her son, since she would have had to pay his full premium on her workplace plan.

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