UPS Concerned About ObamaCare

Costs - Are You Concerned With

Your Cost?

In March 2010, Healthcare Reform was signed into law. Healthcare Reform contains

provisions that have changed and will continue

to change the health insurance industry in

substantial ways. Here is a company that is seeing the effects and higher cost for

it's operation.

The company United Parcel Service Inc. plans to drop

health-insurance benefits for working spouses of nonunion

employees, if they can get coverage elsewhere. With the

changes in the new health care law it sees no other choice and blames it for their decisions.

The company has over 15,000 employees and and has nearly

33,000 spouses it covers currently; however will drop

those spouses effective January 1, 2014 for spouses of United

States employees.UPS cited a benefits consultant's survey that found more companies are planning

on restricting benefits for working spouses.

UPS said it was making the change because of rising

health care costs and the 2010 law championed by President Barack Obama. The company said that it considered letting employees pay extra to cover

their working spouses but decided that would be difficult

to do.

"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," the company said in a memo to

employees.

According to benefits consultant Mercer LLC,

relatively few large companies exclude coverage

for spouses who have the option of other employer

coverage.

Mercer said that in 2012, just 6 percent of companies with 500 or more employees

excluded such spouses, although that was double the percentage in 2008. It

said another 6 percent levied a surcharge to cover

those spouses.

"Employers are thinking about it because (health

insurance) costs are continuing to go up," said

Mercer partner Joan Smyth. "They're trying to walk a

fine line between being fair to their employees but also being fiscally responsible."

Smyth said employers are waiting to see whether spouses can find coverage from public

insurance exchanges to be created under the health law. Other provisions of the law,

such as a per-participant fee to subsidize premiums for high-cost people in the individual-

policy market, encourage employers to reduce the

number of people they cover, she said.

Paul Fronstin, a senior research associate at the

Employee Benefit Research Institute, said that the

percentage of employers booting working spouses off

plans is still small — it's more common to simply add a

surcharge for insuring them.

"But trends start with small numbers," he said. "There's a herd mentality. When you

have a big employer like UPS do this, it's easier for other employers to do the

same thing."

In explaining the change to employees, UPS cited a

survey by consultant Towers Watson. That firm surveyed 583 employers and reported

growing interest in reducing coverage for

working spouses.

It said 4 percent already exclude spouses who can

get coverage through their own employer and another 8 percent plan that in 2014. Many more — 20 percent

now and rising to 33 percent next year — impose

a surcharge for covering that same working spouse.

Andy McGowan, a UPS spokesman, said the change was part of the company's

effort to keep health-insurance premiums at or below current levels for a "significant" number of employees. He said the

company's premiums have risen sharply in recent

years.

UPS told employees that spouses will no longer be eligible for physical and

mental health benefits and prescription-drug coverage.

"However, you may enroll her in dental, vision and

supplemental benefits such as life insurance" even if

the spouse's employer provides those, UPS told workers. It added that

spouses eligible for Medicare won't be excluded

from coverage.

The change also won't affect UPS' union workers, many of

them represented by the Teamsters. Their health

benefits are spelled out in labor contracts.The new policy will produce one

benefit for the nonunion employees: Those whose spouses lose UPS coverage will see their share of their insurance decline.

The company said it could be almost $1,600 for some workers.

The UPS change was first reported by Kaiser Health

News and USA Today. We cannot predict the outcome of any future legislation or litigation related to Healthcare

Reform. As described under “Item 1. Business—Health

Insurance Industry and Market Opportunity,” we

expect

Healthcare Reform to result in profound changes to the individual health insurance market and our business.

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