United Parcel Service (UPS) announced Wednesday plans to take thousands of employee spouses off its medical plan if they can get coverage elsewhere, setting a trend others are expected to follow.
The package delivery giant blames rising medical costs and the Affordable Care Act, which goes into effect 2014 and aims to give Americans better coverage and cheaper rates.
“It doesn’t surprise me a bit, that’s the tip of the iceberg,” said Dr. Roger Stark, an analyst with the Washington Policy Center.
According to Dr. Stark, more companies will likely follow in UPS’ lead.
“They’re going to look at their overall health expenses, they’re going to see costs go up and they’re going to say how can I stay competitive in my market?” he said.
UPS had 399,000 employees last year. Of 33,000 spouses on its health plan, 15,000 can get their own coverage. With this new policy, the company expects to save $60 million a year.
“That’s horrible, that just isn’t right,” said Joe Fong.
Joe and his wife Rita both have full-time jobs but are on his insurance plan.
“Sometimes it costs more to be on my insurance versus his insurance, that’s why we’re on his insurance,” said Rita Fong, who works in city government.
They expect this new trend to create difficult decisions, forcing families to leave doctors they know and have relied on for years.
“Our doctor that we have doesn’t take my insurance,” said Rita Fong.
The healthcare law requires companies to cover employees and dependent children but not spouses or domestic partners.
It also offers tax breaks for small businesses like Plum Bistro, a restaurant in the Capitol Hill neighborhood. The owner is taking advantage of the incentives and plans to pay 100% of premiums for all of its employees.
Companies are also using tactics to get spouses of their plans. The City of Anacortes offers employees a bonus if their spouses get health coverage somewhere else.