Exclude dependents with coverage

We are a small business in Michigan and have been told that we can not have an exclusion in our benefit eligibility stating:

You may cover spouse or dependent children, unless they currently have coverage or are eligible for coverage through another plan.

The intent being that if a spouse is offered coverage from their employer and can cover the children, then they can not be covered under our plan unless the employee wants to pay the full amount of the difference.

Our insurance is through BCBS and our plan administrator is stating we can't do this, however we are also being told (by others not in the insurance business) that yes we do have the right to make this a requirement. What can anyone tell me????


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  • [font size="1" color="#FF0000"]LAST EDITED ON 05-31-06 AT 03:10PM (CST)[/font][br][br][font size="1" color="#FF0000"]LAST EDITED ON 05-31-06 AT 03:10 PM (CST)[/font]

    I don't think you can deliberately and explicitly exclude a whole segment of your possible pool of insureds in this manner - I agree with your BCBS rep. Don't put it in writing like that. However, I do think you can have an internal policy that states that if anyone wants coverage on their dependents, then they must pay for the whole dependent premium. This applies to all employees, not just people with kids or spouses who can't get coverage elsewhere. The discrimination comes in when you charge only a certain percentage for covered lives (okay, bodies), who may not be insurable in other situations because of age or health, and then charge full premium for those who elect to join your group for whatever reason, even if they don't intend to use it (are healthy). In my eyes, a dependent is a dependent, whether they can join another group or buy an individual or family policy on their own. If you don't want to cover dependents, offer a small stipend so employees can go buy their kids their own policy.

    Your proposal also doesn't make good business sense - if you try to allow selection like you've proposed, you're going to end up with the more UNhealthy dependents on your policy (because they can't get coverage elsewhere). Your proposal may cut the bottom line right now, but think about that line in a couple of years when your overall group rates have increased 50% because of all the sickly people you've allowed to join at lower cost without also allowing verifiably insurable people to join at a higher cost. Charge all dependents the same, and allow 'em all to join. Make them share the risk, too.

    (Edit - Welcome to the Forum! I'm sorry if my post sounds harsh.)
  • I know a lot of plans cover employee only unless the ee wants to pay the full amount for family to be added. It sounds like that's basically what you want to do.
  • Allow me to also welcome you to the forum! I have a slightly different perspective (with the same end) - what if their other insurance coverage is terrible? Or, what if they're on Medicaid or state insurance - does that count? As a taxpayer, I'd sure rather they were on your plan. I don't mean to make light of any of this, but just something to think about.

    If you do a search, or scroll through the pages and pages of previous posts, there are several polls and posts on what everyone covers for who. I think there's also an official HRHero survey somewhere - if you need help finding it, let me know. Off the top of my head, it seemed like many forumites and subscribers paid 100% of employee premium but nothing toward the family. At my current job, we pay 90% of EE and 50% of family.

    Good luck!
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