UPS cuts insurance to 15,000 spouses, blames Obamacare

United Parcel Service is planning to drop 15,000 workers’ spouses from its health insurance plan, citing higher costs due to Obamacare. {via CNN Money}

In an undated memo to employees, UPS ( , Fortune 500) said it will discontinue coverage for all working spouses who are eligible for insurance with their own employer. That applies to roughly half of the 33,000 workers’ spouses covered by UPS today.

The internal document was obtained by Kaiser Health News. UPS told the nonprofit news agency that the policy applies only to non-union U.S. workers and will save about $60 million a year. UPS has not yet responded to questions from CNNMoney.

The reason UPS gave employees: The company is willing to take care of its own, but it won’t bear a burden that other companies can take on.

“We believe your spouse should be covered by their own employer — just as UPS has a responsibility to offer coverage to you, our employee,” the memo states.

In the memo, UPS justified its move by saying that 35% of companies intend to do the same thing, but didn’t cite specific market data. A recent survey by consulting firm Towers Watson found that next year, 18% of employers will require that workers’ spouses buy insurance from their own workplace first.

In the case of UPS, the husbands and wives of employees who don’t work — or who are not offered coverage by their own employer — will get to stay on the UPS plan.

The change will likely impact UPS’s managerial and office staff. Most of the company’s workers, such as delivery workers and truck drivers, are unionized through the International Brotherhood of Teamsters and receive insurance under a different plan.

UPS’s move is the latest example of the corporate response to Obamacare, although the law won’t start to kick in until Jan. 1.

Aside from fear of rising premiums, the Affordable Care Act will also require employers to pay a fee for every person on their plans. It’s going to start at $63 next year, then slowly decrease.

The federal Department of Health and Human Services has said the fee would help with the transition as the American health care system accepts many new sick, previously uninsured people.

About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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