Employer Sponsored Group Dependent Coverage Is No Longer Relevant
“For a lot of families, $15–$25K for dependent coverage isn’t “benefits” anymore — it’s a second mortgage. When ACA marketplace options can deliver compliant coverage with subsidies that drop costs to a few hundred dollars (or less), it’s hard to justify forcing everyone into the group plan just because “that’s how we’ve always done it.”
“When only higher-need dependents enroll, the group plan becomes a magnet for adverse selection, which quietly drives up premiums for the employer and every employee. Helping families understand all their options — including subsidized individual coverage — isn’t cost shifting, it’s smart plan design and good fiduciary stewardship.” – Michael Reagan, CBPA
Here’s an example of the cost of adding dependents on a Texas school district group plan. If families can enroll on similar coverage costing less why would they take the district’s plan? Paying +$15,000 per year when they may qualify for savings in the hundreds or thousands of dollars seems like an easy decision to make.
The following cost chart is on a +7,000 life Texas school district:
Families taking the district’s plan tend to have higher health care needs while younger and healthier families don’t. This smoldering ember invariably lends to a risk-based death spiral turbocharged through adverse selection.
Some employer sponsored health plans have gone so far to exclude dependent coverage. This has proven to lower claims by 40-60%, reduce claim volatility, and it creates a generally healthier risk pool for longer term stability.
Employers who move to employee-only medical coverage plans can assist families to transition to other coverage including ACA Marketplace coverage (often with subsidies), Medicaid or CHIP for children. Employers often provide navigation support, decision guides, or access to benefit counselors who can estimate subsidy eligibility and compare premiums versus the old payroll deductions.
For more information go to Here or call 833-697-4185
