Many of us remember when employers provided an opt-out credit to employees who did not enroll in their medical coverage. Over time, as health care costs continued to rise, the opt-out credit was the first to go in most organizations. Then some employers, in an effort to control costs, began to replace the opt-out credit with a spousal surcharge. But is the opt-out credit poised for a return?
The opt-out credit provides employees with additional cash in their paychecks if they do not enroll in the employer's health care plan and instead enroll in other coverage they have available to them. The spousal surcharge does the reverse - tacks on an additional cost to employees for enrolling a spouse into the employer health plan if the spouse has other coverage available to them.
With health care costs continuing to rise, the idea behind both concepts is to lower your health care costs by having fewer people on the plan. But does the opt-out credit send a better message to employees than the spousal surcharge?
Employees view the opt-out credit as an incentive. If both spouses work and one employer provides an opt-out credit but the other does not, chances are pretty good that the employee with the opt-out credit available will choose to waive coverage, take the credit and enroll in the spouse's plan.
While employers mean for the spousal surcharge to be an incentive for spouses to enroll in their own plan, this is not the perception most employees have. Most employees see it as the employer just charging them more money and feel the employer does not care about their family's well-being.
Better perception, better results
The opt-out credit not only provides a better employee perception but it also provides the employer offering it with better results - they get to subtract two enrollments (employee and spouse) instead of one.
In the case of a family enrollment, the results are even better for the opt-out credit if the entire family goes onto other coverage. In that case, the employer with the opt-out credit could save three, four or even more enrollments into the plan.
Of course, employers don't want workers to forgo coverage just to make an extra buck in their paycheck. It may be wise to require proof of other coverage or have the employee attest to the fact that, by opting out of your medical coverage, they have and are enrolled in other coverage that is available to them.
Consider this - the average health insurance plan cost may be $5,300 per year for an employee, $11,700 for an employee plus their spouse, and $17,500 for an employee plus their family. For a $1,000 opt-out credit, employers are saving a good chunk of change for every employee who takes it and gaining employee goodwill in the process.
The opt-out credit may just begin to see a comeback.
Contributing Editor Christy Yaccarino, GBA, EHBA, HIPAAA, is a benefits manager for Ambrose Employer Group in New York City. She can be reached at
