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UPS to end health coverage for thousands of spouses

By David Koenig

Associated Press

LAST UPDATED: 02:44 p.m. HST, Aug 22, 2013

DALLAS >> United Parcel Service Inc. plans to drop health-insurance benefits for working spouses of nonunion employees if they can get coverage elsewhere. It blames the change partly on the new health-care law.

UPS estimates that 15,000 of the 33,000 spouses it covers will be dropped. The change is scheduled to take effect Jan. 1 for spouses of U.S. employees.

The worldwide parcel-delivery company says it’s just going with the crowd. 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.

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cojef wrote:
Ouch! Affordable Care Act hits another pothole on the road. Simply put if you wife is also working, let her employer pay for her insurance. How about workers whose wives are stay-at-home mothers? Employee must pick-up the extra cost? Tough!
on August 22,2013 | 09:52AM
onwardupward wrote:
This comment has been deleted.
on August 22,2013 | 10:43AM
Grimbold wrote:
Stop all benefits for spouses unless they raised children. Why should Live-in- maids as such they are, have benefits paid by the employer?
on August 22,2013 | 11:46AM
kiheilocal wrote:
Sounds fair to me.
on August 22,2013 | 09:59AM
Anonymous wrote:
The Connector will offer a whopping two choices of providers.
on August 22,2013 | 10:06AM
RetiredWorking wrote:
Sad. Each of the UPS employee have just lost up to tens of thousands of dollars in future medical benefits.
on August 22,2013 | 10:28AM
st1d wrote:
so to cover the 15% of americans that have no medical insurance, obama's health deform will effectively remove health coverage from those who were covered.

instead of ending the misery of the 15% of americans that had no health insurance, obamacare will take coverage away from those who had health insurance. that's the democrat way.

on August 22,2013 | 10:35AM
Pacej001 wrote:
Here's the really sad part. The Congressional Budget Office forecast that there will still be 15 million Americans without health insurance AFTER Obamacare is in effect.
on August 22,2013 | 05:18PM
Surfer_Dude wrote:
Sounds fair to me. If you are a UPS employee (male or female) and you working spouse's (male or female) employer offers health insurance, then grab it. If your spouse is a stay at home mom or dad, then they are still covered by UPS. What's the if deal?
on August 22,2013 | 10:41AM
Kailuaraised wrote:
Not all plans are created equal.
on August 22,2013 | 11:23AM
kahuku01 wrote:
There's a gray area to this change, according to the first sentence of the article. UPS is ending health-insurance benefit for employee's spouses who can get coverage elsewhere. I interpret it to mean that all spouses, regardless if they're a stay home mom would be affected by this cut. How would UPS be able to account for every spouse that are employed or a stay home mom. It would be a chaos to keep a record of who's employed or a stay home mom, especially when they're employed one day or unemployed in couple of months. I would think that most employers would provide an individual or family plan, that would cover the spouse and children. It really doesn't matter to me what UPS medical plans are for their employees, but I know they'll get it straightened out.
on August 22,2013 | 11:38AM
South76 wrote:
As we get more and more details of this Obamacare monstrosity, we are now seeing the effects/consequences of this stupid law....Congress and their aides got exempted from this tax and many more labor unions are opting out of this not so affordable health care tax...it makes you wonder how can Pelosi still go out on television and say this is a good law.....We allow a 26 years old to be covered with parents health insurance: too young or immature to be left out without coverage; yet we allow 15 years olds to get an abortion without parental consent: old enough to make that decision....what is this country is coming to?
on August 22,2013 | 10:45AM
Anonymous wrote:
This is what this obama care is a ll about, UPS can now drop the spouse health coverage increase their profitability by who knows how much. all of the executives and the CEO gets a big bonuses for giving the stock holders a bigger dividend in hopes that they will invest in other venues so more tax revenues are created for the Government to take back, again taking from the working class with no worries for them because they got a government health coverage which is by the way paid by us the very ones their taking away from...go figure,,,
on August 22,2013 | 11:20AM
2NDC wrote:
Tough on families where UPS provided a better insurance policy. The American taxpayer is yet again skrew'd by the obama administration. :-(
on August 22,2013 | 11:21AM
Kailuaraised wrote:
How can anyone say that's fair? So what if they can get coverage elsewhere. That doesn't mean it's cheaper or on par with what UPS provided. For instance, my wife's healthcare would cost her 200$ a month at her employers vs the 50 it cost to add her to mine. Not all plans are created equal. Steal from the rich and educated to give to the have nots. Thanks Obama and the Dems.
on August 22,2013 | 11:23AM
Publicbraddah wrote:
Wow. Didn't even know UPS health benefits covered spouses. This seems to be the exception rather than the norm as most businesses will only cover employees and even that, employees have to pay a part of it.
on August 22,2013 | 11:27AM
RetiredWorking wrote:
Health benefits covering spouses and children is the rule, rather than exception. However, most employees pay a hefty portion. It depends on how generous your medical benefits are. With my private sector job, we had the best Kaiser medical plan, and my monthly payment was ZERO. In my government job, it would've cost me at least $400 monthly. Some would call this a reasonable plan. However, I chose Medicare, which is free. Co-payments are higher, but ZERO monthly premiums offset that.
on August 22,2013 | 07:59PM
awahana wrote:
Everyone still covered.
Just which employer pays changes.
Not even newsworthy, IMO.
on August 22,2013 | 11:33AM
Pacej001 wrote:
Right. There's covered and then there's "covered". The likely result will be that working spouses have insurance that isn't as good as that offered by UPS which has a lower than average deductible (NBC News). So, thanks to Obamacare, these middleclass people just got a stealth tax added to their cost of living courtesy of Obamacare.
on August 22,2013 | 05:25PM
niimi wrote:
I'm self-employed. My ACA policy is quoted at 62% over this year's rate. Not very affordable.
on August 22,2013 | 06:13PM
st1d wrote:
obama promised that if you liked your plan you wouldn't have to change it.

now, we are seeing that in fact, most will be forced to change their plan because of obamacare.

on August 22,2013 | 11:52AM
AhiPoke wrote:
As more information comes out, obama's promise was obviously BS. From the beginning his plan has been to eventually end up with only one type of coverage, that provided by the government. obama, like his father, is a socialist who believes that big government needs to control everything. This article only points to one situation of change that will eventually break our country. I say that because the majority of our country now seem to either believe in the same principles as obama and/or care and know more about pop culture than issues that will impact their lives. I'd bet that, in the 18-30 age group, more people know the sex of the royal bably than they know about the state of social security.
on August 22,2013 | 12:13PM
steveoctober wrote:
Just as simple as that - exactly why USPS will never make any money when they need Congressional approval on anything they want to do to save costs.
on August 22,2013 | 01:57PM
primowarrior wrote:
UPS is projecting $4.6-$4.8 billion in after tax profits this year. Apparently, that's not going to result in enough bonus or ROI for it's executives and shareholders.
on August 22,2013 | 02:11PM
Big C wrote:
When UPS says they are dropping coverage for spouses, does this mean they are going to stop offering coverage to spouses and FAMILY. Or does it mean, the employee can pay for the difference to maintain the coverage of spouse and family.
on August 22,2013 | 02:14PM
2NDC wrote:
Dunno, but either way it sucks that this happened as a direct result of the Federal Government dwindling in the matters of private industry. Lots of families are gonna suffer because of this. :-( I'm sure that many other businesses will follow UPS' lead.
on August 22,2013 | 04:30PM
ryan02 wrote:
I'll bet a lot of people who will use this as an excuse to blame Obama were the same people who dodn't think spouses of employees should get benefits in the first place.
on August 22,2013 | 08:28PM
BadBingo wrote:
I don't believe it. UPS wanted to save money so they found a convenient scapegoat in the Affordable Care Act. Another example of American corporate greed.
on August 23,2013 | 10:00AM
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