A spousal carve-out is a provision in a group medical insurance plan that limits or excludes coverage for employees’ spouses if the spouse has access to health insurance through their own employer.
Variations
- Hard carve-out: Spouses with access to other employer coverage are not eligible at all.
- Soft carve-out (surcharge): Spouses can still join but must pay an additional premium if they have other employer coverage available.
The Plan reserves the right to require proof of other employer coverage availability (or lack thereof), and misrepresentation of spousal coverage status may result in denial or termination of coverage, as well as potential disciplinary action.
An employee’s spouse is eligible to participate in the Plan; however, if the spouse is eligible for group medical coverage through his or her own employer, an additional monthly Spousal Surcharge of $___ will apply to the cost of coverage.
The surcharge does not apply if the spouse is not eligible for coverage through his or her own employer. The Plan reserves the right to require annual verification of spousal eligibility. Failure to provide accurate information may result in retroactive termination of coverage and recovery of claims paid.
Misrepresentation. Any misrepresentation of spousal eligibility or failure to disclose eligibility for other employer-sponsored coverage may result in retroactive cancellation of coverage, recoupment of benefits improperly paid, and disciplinary action, up to and including termination of employment.
Here’s one employer adopting the spousal carve-out strategy – UPS ends health coverage for 15,000 working spouses
