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What Is a Spouse Surcharge in Insurance?

Many employers who provide health insurance to their employees also offer coverage for the employees' dependents. However, with the rising cost of insurance, some employers have placed restrictions on coverage for a spouse who has another source of insurance. One such restriction is a spousal surcharge, which is an extra fee the employer charges to provide coverage for a spouse who has access to insurance from another employer.

  1. Spousal Surcharges

    • If your employer provides insurance coverage but your spouse has access to employer-sponsored insurance elsewhere, you may have to pay a spousal surcharge to have her added to your policy. Spousal surcharges can range anywhere from $600 to more than $1,000 per year. Employers typically implement spousal surcharges to encourage their employees' spouses to opt for other coverage. Spousal surcharges do not usually apply to unemployed spouses or to spouses whose employers do not provide health insurance coverage.

    Other Restrictions

    • Some employers may decide to implement a spousal carve-out instead of a spousal surcharge. A spousal carve-out is a restriction that prohibits an employee from including his spouse on the employer's group health plan if she has access to other coverage. Employers may also decide to only offer coverage to an employed spouse if she also enrolls in a plan with her employer.

    Implications

    • Employers implement spousal surcharges, spousal carve-outs and other restrictions to reduce their own costs by limiting spousal participation in the company's group health plan. However, in some cases, the health care plan offered by your spouse's company may not be as good as the one offered by yours. If the employer restricts coverage using a spousal carve-out, you will not be able to add your spouse to your policy. However, if your employer charges a surcharge fee, you will have to decide whether the benefits are worth the added cost.

    Legal Concerns

    • As of 2011, not all states will uphold spousal surcharges or spousal carve-outs in court if they're disputed. Some states also require employers to apply restrictions to single employees with duplicate coverage as well as to married employees to prevent discrimination. Most states will not allow employers to place duplicate coverage restrictions on children.

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