Money Saving Health Insurance Tips for Spouses
Switching to your spouse’s health insurance plan may save you money. Or, depending on the circumstances, you might find that it’s cheaper for to you each enroll in your own employer’s health plan. This article will help you understand the questions you should ask and the points to keep in mind when deciding whether both spouses should be on the same health plan or have separate coverage.
If you and your spouse or partner are both eligible for employee health benefits, check out each company’s health insurance options during open enrollment. Employers differ considerably in terms of the coverage they offer and the contributions they make towards total premiums. Depending on the circumstances, you may be able to save money by switching to your spouse’s family coverage.
In addition to choosing between each spouse’s employer’s coverage, you may also have multiple plan options offered by one or both of the employers. You may be able to save money by choosing a different plan, such as an HMO that requires you to choose a primary care doctor to coordinate your care. In some areas of the country, the local physicians may be in all or most of the health plan networks and you may not have to be concerned about changing doctors.
Take Advantage of Open Enrollment
Many large companies offer a variety of health plans. During your company’s open enrollment period, you may change your coverage from one health plan to a different plan. Your medical history does not play a role in your eligibility to switch plans, but if you want to continue working with a particular doctor, you’ll want to double-check that they’re in the network of the plan you’re considering.
Depending on the plan choice that your employer offers, you may be able to make other choices, such as increasing or decreasing the amount of your annual deductible. Open enrollment is also your opportunity to sign up for health coverage if you hadn’t previously enrolled, or drop your coverage (necessary if you’re planning to join your spouse’s plan instead; understand that you can’t drop employer-sponsored coverage outside of the annual open enrollment window unless you have a qualifying life event).
Employer-sponsored health coverage usually has an open enrollment window that lasts about a month, although it varies from one employer to another. Most companies hold their open enrollment periods in the fall of each year to allow for changes in health benefits on January 1 of the coming year. Some companies have their open enrollment periods at other times and you can expect to receive sufficient notice in advance.
Once your company’s open enrollment period ends and you have made your choices for the coming year, your health coverage is locked in until the next yearly enrollment period. Unless you have some type of qualifying event, you will not be able to modify your health coverage for a full year.
If you are considering switching to your spouse’s health insurance or vice versa, check to see if both plans follow the same plan year, with the same start date for changes made during open enrollment. You’ll be able to disenroll from one plan during its open enrollment and enroll in the other plan during its open enrollment, but you could end up with a gap in coverage for a while, if the two employers don’t have the same plan year.
Most employers run open enrollment in the fall, with coverage changes effective January 1. But it’s important to understand that if one employer holds open enrollment in the middle of the year (with a new plan year that starts August 1, for example), and the other holds open enrollment in the fall with a plan year that follows the calendar year, you might be uninsured for a few months during the transition.
Fortunately, you’ll have the option to select an ACA-compliant plan in the health insurance exchange in your area to cover you for the intervening months. If your gap in coverage is going to be at the start of the year, you can use the fall open enrollment period (November 1 to January 15 in most states) to sign up for a plan in the exchange.
And if your gap in coverage is going to be mid-year, you’ll qualify for a special enrollment period due to the renewal of a non-calendar-year health plan. This will allow you to enroll in a plan through the exchange, which you can then drop when you join your spouse’s plan a few months later.
Note, however, that you would not be eligible for a premium subsidy in the exchange if the employer-sponsored plan that you’re not renewing (or your spouse’s employer’s plan) would otherwise provide minimum value and be considered affordable.
If you’re in good health, you can sign up for a short-term plan to cover you during the gap, but be aware that these plans are not regulated by the ACA, generally do not cover pre-existing conditions, generally do not cover all of the essential health benefits, and tend to have fairly low benefit caps.
A qualifying event allows you to change your job-based health insurance coverage anytime during the year. What qualifies as an “event” is determined by federal regulations and includes things like marriage, the birth or adoption of a child, or involuntary loss of other health coverage:
During the special enrollment period triggered by a qualifying event, you can join your spouse’s insurance or vice versa. Note, however, that the scenario described above (when spouses’ employers have mismatched open enrollment periods and plan year start dates) does not trigger a special enrollment period for employer-sponsored insurance. If you drop your coverage during your open enrollment period, and your spouse has a later open enrollment period, your loss of coverage doesn’t count as a qualifying event, since it was a voluntary—rather than involuntary—loss of coverage.
(But as described above, the end of a plan year on a non-calendar-year health plan does trigger a special enrollment period for self-purchased health coverage that you obtain in the exchange, and those plans can be dropped at any time.)
Additionally, if you have a managed care plan (such as a PPO or HMO) and use a provider network, you may be able to change health plans if you move to a different community and are no longer in the network service area of your old plan.
Note that if you purchase your own health insurance in the individual market (through the exchange or off-exchange), you’ll also have opportunities to enroll—or switch to a plan with your spouse—outside of the annual open enrollment period if you experience a qualifying event. The qualifying events that trigger special enrollment periods in the individual market are similar, but not identical, to the qualifying events that trigger special enrollment periods for employer-sponsored plans.
Deciding Which Spouse’s Plan Will Provide the Best Value
Although it may take you some time, run the numbers to see if it makes sense for all members of your family to stay on the same health plan. You may be able to save money by having separate health coverage for some members of the family. For example:
Don and Barbara
Don S., age 46, and his wife Barbara S., age 44, both have the option for health insurance through their employers. They have family coverage through Don’s job, which includes coverage for their two children, ages 10 and 14. Don has type 2 diabetes, high cholesterol, and high blood pressure; he uses a lot of healthcare services. Barbara and the children are in excellent health and have only needed routine checkups in the past several years.
Because of Don’s health problems, they have a low deductible family health plan that has very high premiums. The family may be able to save money by having Don keep the low deductible plan through his employer and have Barbara choose a higher deductible family plan for herself and the children through her employer.
But this won’t always be the best choice, because it depends in large part on how much of the premium each employer is willing to cover. The average employer that offers health benefits pays almost 73% of total family premiums.
But some employers only contribute to the premiums for their employees, and not for family members who are added to the plan. So in order to determine whether your family should be covered under one plan or utilize both, you’d need to know how much you’re going to have to contribute in premiums under each option as well as how much you’re likely to pay in out-of-pocket cost-sharing.
Maria and Jorge
Maria G., age 32, and her husband Jorge G., age 33, both work full time and each has health insurance provided by their employers. Both companies have an open enrollment period from mid-October through mid-November, and a plan year that starts on January 1 each year.
In September, Maria gave birth to a baby boy, a qualifying event that allowed them to add the baby, Jorge, Jr. to one of their health insurance plans. However, adding a dependent to either plan changes the insurance coverage from employee-only to either family coverage or employee-plus-child coverage (depending on the premium classifications that the employer uses), which significantly increases the monthly premiums.
Faced with an increase of more than $250 each month from either employer, the couple looked at their options. One option is to put all members of the family in one health plan from one employer (they can do this during the special enrollment period instead of just adding the baby to one plan, if they choose to do so).
This may end up saving them money, particularly if one of their employers would bump up the coverage to “family” premiums with the addition of Jorge, Jr. If that’s the case, adding the other parent wouldn’t increase the premiums. But they would need to compare the family rate on that plan with the potentially lower employee-plus-children rate on the other plan, in addition to an employee-only plan for the other parent. Different plans have different rules and pricing for this, so the only way to see what will work best is to get specific answers from both employers’ health plans.
Another option is to purchase an individual market policy for the baby. Depending on how much the employers charge to add dependents, it may end up being less expensive to buy a separate policy for the baby.
This is unlikely to be the case if a family has more than one child, however, since large employer-sponsored plans typically charge the same price for one child or multiple children, whereas individual market plans will charge a separate premium for each child in a family, up to a maximum of three (beyond three children in one family under the age of 21, there is no additional premium in the individual market or in the small group market).
Understand the Family Glitch Fix
If you’re considering an individual market plan for one or more family members, despite an offer of coverage from an employer, it’s important to understand how financial assistance in the individual market is affected by an offer of employer-sponsored coverage.
For people who buy individual market coverage, premium subsidies are available in the ACA exchange in each state, depending on income. But access to an employer-sponsored plan also plays a role in determining subsidy eligibility.
Prior to 2023, if employer-sponsored coverage that provided minimum value was available to your family, and the cost to cover just the employee was considered affordable, any other family members who were eligible to be added to the employer-sponsored plan were ineligible for subsidies in the individual market—regardless of how much it would have cost in premiums to add them to the employer’s plan.
This was called the family glitch, and it prevented some families from obtaining affordable health coverage. But the IRS finalized a solution to the family glitch in the fall of 2022, effective as of the 2023 plan year.
Under the new rules, the exchange/marketplace conducts two affordability determinations when a family has an offer of employer-sponsored coverage: One for the employee, and one for the family. If the employee’s coverage is affordable but the family coverage is not, the family members are potentially eligible for a subsidy in the exchange (depending on how the price of exchange coverage compares with the total household income).
Surcharges for Spouses
Under the Affordable Care Act, large employers are required to offer coverage to their full-time employees and those employees’ dependents. But they are not required to offer coverage to employees’ spouses.
Most employers have continued to offer coverage to employees’ spouses, but some have determined that spouses are ineligible to enroll if they have coverage available through their own employers, and some firms now add a surcharge if employees’ spouses choose to be added to their spouses’ plans when they also have the option of signing up with their own employers’ plans.
To further complicate matters, some employers that offer health insurance benefits provide additional compensation to their employees if they decline the employer-sponsored plan and instead choose to enroll in their spouse’s plan.
So some employers are taking active steps to reduce the number of spouses who enroll in their plans, while some employers are taking active steps to encourage their own employees to sign up for their spouse’s coverage rather than their own employer-sponsored plan.
So for example, consider Bob and Sue, who are married and each has employer-sponsored coverage available from their own employer. Both employers also use spousal surcharges when the spouse has his or her own employer-sponsored insurance option available. If Bob decides to join Sue on her employer’s health plan, her employer will add on a surcharge—in addition to the premium—because Bob could instead choose to be on his own employer’s plan.
It might still make the most sense to add your spouse to your employer’s plan when you factor in all of the variables, but you’ll want to understand whether or not your employer has a spousal surcharge for spouses who decline their own employer-sponsored plan and enroll in the spouse’s plan instead.
Special Consideration If You Have an HDHP
If you or your spouse has an option for an HSA-qualified high deductible health plan (HDHP) at work, you’ll need to be aware of the ramifications of having just one family member on the plan versus more than one.
If just one family member has coverage under the HDHP, the maximum amount you can contribute to the HSA is roughly half as much as it would be if two or more family members had coverage under the HDHP. (For 2023, you can contribute $7,750 to an HSA if your HDHP also covers at least one additional family member, but only $3,850 if you have self-only HDHP coverage).
So if you have or are considering HDHP coverage and contributions to an HSA, you’ll want to keep this in mind when you decide whether the whole family should be on one plan, or on separate plans.
For some families, it might work best to just have one spouse on an HDHP and the other spouse and/or kids on a more traditional plan. But other families will find that having the whole family covered by an HDHP is the best way to maximize the potential tax advantages of an HSA.
In a household where both spouses work, it common for each of them to have an offer of employer-sponsored health coverage. In most cases, they have the option to either use their own coverage or choose to be added to their spouse’s plan.
But the specifics will vary from one family to another, and there’s no one-size-fits-all when it comes to determining whether both spouse’s should be on one health plan or each use their own. Families need to consider the total premium cost (including spousal surcharges, if applicable), the out-of-pocket costs, the provider network that each plan offers, and how any necessary medications would be covered by each plan.
A Word From Verywell
During open enrollment, or when you have a qualifying life event, it’s important to reconsider whether your family would be better off with one health plan or separate plans. And even if you already made this choice at some point in the past, you don’t want to assume that it will continue to be the option that works best. This is an issue to revisit periodically, as your medical needs, premium and out-of-pocket costs, and/or coverage options may have changed since the last time you checked.