United Parcel Service, Inc. (NYSE:UPS) is dropping healthcare coverage for working spouses of its non-union employees. The company explained that the 15,000 working spouses that will be affected by its decision are eligible to obtain medical insurance from their own employers, according to a report from Kaiser Health News.
UPS blames Affordable Care Act
United Parcel Service, Inc. (NYSE:UPS) blames the Affordable Care Act (ACA), popularly known as Obama Care, for its decision to exclude the working spouses of 20% of its 77,000 employees from its Flexible Benefits Plan starting January next year.
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In a memo to its employees, United Parcel Service, Inc. (NYSE:UPS) wrote, “Since the Affordable Care Act require employers to provide affordable coverage, we believe your spouse should be covered by their own employer–just as UPS has a responsibility to offer coverage to you, our employee. Limiting plan eligibility is one way to manage ongoing healthcare costs, now and into the future, so that we can continue to provide affordable coverage for our employees.”
United Parcel Service, Inc. (NYSE:UPS) cited market data that other companies (35%) are also planning to exclude working spouses who are eligible to get medical insurance from their own employers in 2014. However, the company did not identify the source of the data.
UPS’ Flex Plan for 2014
According to the shipping giant, the cost of coverage under its Flex Plan for 2014 will be similar to its 2013 cost of coverage. However, United Parcel Service, Inc. (NYSE:UPS) said that those whose spouses will be removed from the Flex Plan will save $1,600 in the employee’s cost share for coverage.
Andy Cowan, spokesperson for United Parcel Service, Inc (NYSE:UPS) said that the company will be able to save $60 million a year from its decision.
Towers Watson surveyed large companies, and 4% of the respondents excluded spouses of employees who can get healthcare coverage from their own employers and 8% are planning to implement the same move next year.
Edward Fensholt comments
Edward Fensholt, senior vice president at insurance broker Lockton Cos. commented, “They are simply saying to the spouse outright, “If you have coverage somewhere else you are not eligible here. We don’t see a lot of that out there, but more than we used to.”
Jonathan Gruber, an economist at MIT who serves as one of the advisers of the Obama Administration on health policy commented, “Nobody expected the ACA to have a major effect on health costs for large firms.”