How to Treat Employees Who Have Spousal Health & Dental Coverage
Many employees who have health & dental benefit coverage through a spouse often assume and tell their employers they are fully covered. Therefore they don’t require to participate in their employer’s benefit plan. Unfortunately, many employers take what they’re told as fact and this misunderstanding can cause great difficulties and grief for both employees and employers in the future.
The reasons why employees with spousal coverage should participate in their employer’s benefit plan are many:
- Employees who have ‘spousal’ coverage have Health & Dental benefits only, but not Life and Long Term Disability (LTD) which are typically included with most group benefit plans. As LTD is based on an employee’s own income at their own place of work, it isn’t available through a spouse’s plan.
- For most working people the LTD – otherwise known as income replacement – is the most important coverage to have in place. When disability is acquired through a benefit plan the premium is less than half the cost of buying the equivalent coverage on an individual basis.
- When employees with spousal benefits participate in their own employer’s benefit plan for the Life and LTD only and later lose their spousal coverage they can request to add the health and dental to their coverage, guaranteed, providing they do so within 60 days of losing their spousal coverage.
- If employees with spousal benefits don’t acquire the Life and LTD coverage when they are first hired and later wish to add the health and dental, they and their dependents will be considered Late Entrants. Late Entrants are NOT guaranteed coverage, they require to complete health questionnaires for medical underwriting and if anyone has a pre-existing health condition they can be excluded or declined all coverage.
- In addition, the annual dental coverage limit for Late Entrants dental benefits is reduced to just $250 per family member for the first twelve months of coverage.
I recommend to all business owners to be sure to have all their new and eligible employees apply for coverage for their benefit plans no later than 3 months after their first day of full-time employment. Employees who have spousal benefits have the lowest premium costs and the more employees that participate in your firm’s plan the lower the per employee premium cost will be.