When both you and your spouse are eligible for job-based health insurance coverage, figuring out which health insurance plan to choose may seem like a good problem to have. But it’s not always a straightforward one. Now that open enrollment season is here, these are some factors to take into consideration.
When family members are eligible for health insurance plan coverage through two employers, covering everyone (both spouses and any dependent children) under a single plan is often the easiest and most cost-effective choice. In some situations, though, it makes sense to choose separate health plans or even to have dual coverage, that is, covering family members under both plans. Ask yourself these questions when making the decision.
Does your spouse tend to use more — or fewer — healthcare services than you do? If so, the more generous plan that offers a lower deductible and cost sharing may be the best choice for the spouse who uses more healthcare because the savings outweigh the higher premiums. This is also the case for children who use more healthcare. Family members with fewer healthcare expenses could opt for a plan with lower premiums.
Do you want to minimize the risk of incurring high out-of-pocket costs for healthcare services? Maybe you’ve had high unexpected healthcare expenses in the past, whether due to an accident or an unplanned surgery. Or perhaps you’re expecting major healthcare outlays in the year ahead. If so, the extra expense of dual coverage, with two sets of insurance premiums and two deductibles, may be worth it for peace of mind. (You should know that one health plan will not pay the deductible for the other health plan.)
Will you be expected to pay more for your spouse’s insurance premiums — or will your spouse be eligible for fewer benefits? In some cases, your monthly premium for a spouse who is eligible for coverage through their employer will be higher. This spousal insurance surcharge could be $100 per month or more. Also, your employer may place restrictions on coverage for your spouse, a plan feature known as a spousal carve out or “working spouse rule.” If either of these applies, it may cost less for each spouse to obtain coverage individually. You may have a pleasant surprise in store, though: Instead of charging extra, some employers offer a money incentive to employees who don’t enroll their spouses in the employee’s plan.
Finally, for people with domestic partners, know that some employers offer health insurance to domestic partners, even in areas where domestic partnerships are not formally recognized by the state or local government.
Beginner tip
If you are one of the 50 million Americans who work for a small business (that is, one with fewer than 50 employees), you may not consider premiums for your family health coverage to be affordable. As of 2023, if you qualify for tax credits, you have the option of declining it and buying subsidized coverage through the health insurance marketplace for yourself and your family members instead. Or you may wish to accept job-based coverage for yourself and arrange for marketplace coverage for your family. The key is whether your employer’s plan meets the government’s criteria for being affordable.
Advanced tip
If you and your spouse opt for dual coverage, one health plan is considered the primary payer for any dependent children, meaning it pays first, and the other the secondary payer. That can make a big difference in your family’s out-of-pocket costs. You can’t decide which one is primary; the parent whose birthday comes first in a calendar year has the primary coverage for the kids. That’s called the birthday rule (although it’s an insurance industry business practice, not a law). If you are expecting a baby, knowing which health plan is primary ahead of time can help you manage your healthcare expenses.