Spouses tend to be covered on the same health insurance policy. But that’s not always possible, nor is it always the option that makes the most sense. Let’s take a look at the rules that apply to spousal coverage, and the questions you should ask before deciding whether or not you and your spouse should—or can—be on the same health insurance policy.

Out-of-Pocket Exposure

Families need to consider the total out-of-pocket exposure of whatever health plan or plans they have or are considering. The Affordable Care Act limits total out-of-pocket costs to no more than $14,700 for a family in 2018 (that’s increasing to $15,800 in 2019), and prevents any single member of the family from paying more in out-of-pocket costs (for in-network services) than $7,350 (also increasing in 2019, to $7,900). But the family out-of-pocket limit applies to a single policy that covers members of the family.

If the family is split up onto multiple plans—including employer-sponsored insurance, individual market coverage, or Medicare—the family out-of-pocket limits apply separately for each policy. So if a family opts to have one spouse on one plan and the other spouse on a separate plan with the couple’s children, each plan will have its own out-of-pocket limit, and the total exposure could be higher than it would be if the whole family were on one plan (note that Original Medicare doesn’t have any cap on out-of-pocket costs, and this didn’t change with the Affordable Care Act; Original Medicare enrollees need supplemental coverage—either a Medigap plan or coverage from a current or former employer—to limit out-of-pocket costs).

Healthcare Needs

If one spouse is healthy and the other has significant medical conditions, the best financial decision might be for them to have two separate policies.

The healthy spouse might choose a lower-cost plan with a more restrictive provider network and higher out-of-pocket exposure, while the spouse with medical conditions might want a higher-cost plan that has a more extensive provider network and lower out-of-pocket costs.

This won’t always be the case, particularly if one spouse has access to a high-quality employer-sponsored plan that will cover them both with a reasonable premium. But depending on the circumstances, some families find that it’s prudent to pick separate plans based on specific medical needs.

Implications for Health Savings Accounts

If you have a Health Savings Account (HSA) or are interested in having one, you’ll want to be aware of the implications of having separate health insurance plans.

You can contribute up to $6,900 to an HSA in 2018 (and up to $7,000 in 2019) if you have “family” coverage under an HSA-qualified high deductible health plan (HDHP). Family coverage means at least two members of the family are covered under the plan (ie, anything other than “self-only” coverage under the HDHP).

If you have an HSA-qualified plan under which you’re the only insured member, your HSA contribution limit in 2018 is $3,450 (and $3,500 in 2019). You and your spouse can each have separate HSAs and separate HSA-qualified high deductible health plans. But if one of you has an HSA-qualified plan (with no additional family members on the plan) and the other has a health insurance plan that isn’t HSA-qualified, your HSA contribution will be limited to the self-only amount ($3,450 in 2018, and $3,500 in 2019).

Employer-Sponsored Health Insurance

Nearly half of all Americans get their health insurance from an employer-sponsored plan—by far the largest single type of coverage. If both spouses work for employers that offer coverage, they can each be on their own plan. If the employers offer coverage to spouses, the couple can decide whether it makes sense to have their own plans, or add one spouse to the other’s employer-sponsored plan.

There are several things to keep in mind when you’re deciding the best course of action:

• Employers are not required to offer coverage to spouses. The Affordable Care Act requires large employers (50 or more workers) to offer coverage to their full-time employees, and requires them to also offer coverage to those employees’ dependent children. But there’s no requirement that employers offer coverage to employees’ spouses.
• That said, the majority of employers that offer coverage do allow spouses to enroll in the plan. Some employers offer spousal coverage only if the spouse does not have access to their own employer-sponsored plan.
• Under the ACA, the coverage large employers offer to their full-time employees must be considered affordable, or else the employer faces the possibility of financial penalties. But the affordability determination is based on the cost of the employee’s premium, regardless of the cost to add dependents or a spouse to the plan. This is known as the family glitch, and results in some families facing significant costs to add the family to the employer-sponsored plan, but also being ineligible for subsidies in the exchange.

• But many employers do pay the lion’s share of the cost to add family members, even though they’re not required to do so. In 2018, the average total premiums for family coverage under employer-sponsored plans was $19,616. Of that amount, employers paid an average of $14,069, or nearly 72 percent. But this varies considerably depending on the size of the organization; smaller firms are much less likely to pay a significant portion of the premium to add dependents and spouses to their employees’ coverage.
• Some employers add surcharges to the premiums they charge for spouses if the spouse has an option for coverage at their own workplace. If your employer does this, the total cost will need to be taken into consideration when you crunch the numbers to see whether it’s better to have both spouses on the same plan, or have each spouse use their own employer-sponsored plan.
• Conversely, about 10 percent of employers provide additional compensation to their employees who enroll in a spouse’s plan rather than enrolling in the employee’s own employer-sponsored plan. These are questions you’ll want to address with your human resources department during your initial enrollment period and your annual open enrollment period. The more you understand about your employer’s position on spousal coverage (and your spouse’s employer’s position), the better-equipped you’ll be to make a decision.

Individual Health Insurance

If you buy your own health insurance, either through the exchange or outside the exchange, you’re in what’s known as the individual market. You have the option of putting both spouses on one plan, or selecting two different plans.

You can pick separate plans even if you’re enrolling in the exchange with premium subsidies. To qualify for subsidies, married enrollees must file a joint tax return, but they don’t have to be on the same health insurance plan. The exchange will calculate your total subsidy amount based on your household income and apply it to the policies you select. You’ll reconcile the subsidies on your tax return the same way you would if you had one policy covering your family, and the total subsidy amount you receive will be the same as it would if you were together on one plan (the amount you pay in premiums will be different, however, since the total pre-subsidy cost for the two plans will likely be different from the total pre-subsidy cost to have both spouses on one plan).

You can also choose to have one spouse get an on-exchange plan and the other an off-exchange plan. This might be something to consider if, for example, one spouse is receiving medical treatment from providers who are only in-network with off-exchange carriers. But keep in mind that there are no subsidies available outside the exchange, so the spouse with an off-exchange plan will pay full price for the coverage. And while the spouse with exchange coverage is still eligible for subsidies based on the total household income and the number of people in the household, the total subsidy amount could be considerably lower (here are examples to show how this works).

If one spouse has access to an affordable employer-sponsored plan and the other spouse is eligible to be added to that plan but chooses to buy an individual market plan instead, no premium subsidies are available to offset the cost of the individual plan, since subsidies aren’t available to people who have access to affordable employer-sponsored coverage.

There’s no one-size-fits-all in terms of whether spouses should be on the same health insurance plan. In some cases, they don’t have access to the same plans, and in other cases, it’s advantageous for them to have separate plans, for a variety of reasons.

Cosmo Insurance Agency is an independent insurance agency serving surrounding communities in New Jersey. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating the latest in technology-based tools and laws on healthcare, employee benefits, life insurance and finance, we keep our clients up-to-date with the plans that encompass all of their needs, whether it is individual or group insurance. 

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