What If an Employee Gets Insurance Through Their Spouse? A Small Business Owner'

1. It comes down to this: you’re a small business owner, juggling the million tasks of running your company, and now you have to figure out employee health insurance. One common scenario throws a wrench in the works — an employee has insurance through their spouse. So, what’s the catch? Should you adjust your group health plan? Can you save money? Or will this just complicate things even more? Let’s cut through the noise and get practical. We’ll break down what it really means when your employee waives coverage in favor of their spouse’s plan, the often overlooked costs and pitfalls, and how tools like the HealthCare.gov resources, Kaiser Family Foundation data, and the IRS guidelines come into play. We’ll even touch on the reliable Small-Group Health Plans and the SHOP Marketplace, so you have all the cards on the table. Waiving Coverage: What Does That Even Mean for Your Business? When an employee opts to get insurance through their spouse instead of the plan you offer, they’re said to “waive coverage.” Sounds simple, right? But it’s not just about pocketing what you don’t pay in premiums — it impacts your plan’s participation rates, compliance requirements, and sometimes your ability to negotiate better rates. Here’s the crux: Many small businesses shoot themselves in the foot by not collecting proper proof of other coverage or failing to get an actual “waiver” signed. That’s risky because without documentation, insurers default to expecting full participation or charge higher premiums. You could even violate rules by charging waived employees the same premiums as those who enroll. Participation Requirement Issues: More Than Just a Number Game Small-group health plans typically require a minimum participation rate among eligible employees. Participation rates vary by state but generally hover around 70-75%. If too many employees waive coverage, you might miss the mark, and the insurer can: Raise your premiums significantly Refuse to renew your policy Force you into a less favorable risk pool So, maintaining solid participation isn't just corporate red tape; it’s about controlling your costs and keeping the plan healthy. Price Check: How Much Are You Actually Paying? Let’s get down to numbers, because at the end of the day, your bottom line is what matters. If you’re offering a traditional small- group plan, expect to contribute roughly $200-$300 monthly per employee — sometimes more, sometimes less depending on location, age, and plan design. Sounds fair, right? But hold on: if several employees waive coverage, your fixed costs per enrolled employee go up. Plus, if you’re offering premium subsidies to entice enrollment, you might be subsidizing fewer people, stretching your budget thin. Compare that to a Health Reimbursement Arrangement (HRA), which allows you to fund a fixed allowance for employees to buy their own insurance, including through their spouse’s plan. HRAs can help you predict and cap costs, eliminating the dreaded surprise premiums. But is it actually worth it? Traditional Group Plans vs. HRAs: The Pros and Cons Feature Traditional Group Plan HRA (e.g., QSEHRA) Cost Predictability Variable premiums; can spike with low participation or claims Fixed monthly contribution; employer controls spending Employee Choice Limited to the carrier and plan you pick Employees pick their own plan — possibly through spouse or SHOP Marketplace Administrative Hassle Moderate; benefits administration plus compliance paperwork Lower; no group plan underwriting but requires careful coordination Compliance & Reporting Subject to ACA employer mandate if 50+ employees IRS compliance for QSEHRA contributions; flexible for small firms The Bottom Line Depending on your company’s size and employee preferences, HRAs can be a powerful alternative. Especially when a chunk of your workforce has coverage through spouses. Instead of paying full premiums for fewer employees, you fund an HRA and let

2. employees decide what works. But if you have plenty interested in group coverage, a traditional plan might still make more sense from a simplicity and negotiation perspective. SHOP Marketplace and Small-Group Health Plans: Tools Worth Knowing The SHOP Marketplace is a lesser-known but valuable resource for businesses under 50 employees. It offers access to Small- Group Health Plans with potential tax credits that can cover up to 50% of premium costs. What does that even mean for you? Tax credits: If you pay at least 50% of premiums and employ mostly low- to moderate-income workers, you might qualify. Easy enrollment: Centralized system streamlines sign-ups and plan selection. Employee shopping: Employees can compare multiple plans side-by-side and pick what fits them. However, the SHOP Marketplace has participation requirements too. If too many employees waive coverage, you might lose access to favorable rates or credits. Common Mistake: Not Getting Employee Input Before Choosing a Plan One of the biggest blunders I’ve seen: business owners pick a plan without asking their employees what they actually want or need. So you end up with a Network Insider shiny plan nobody uses, people waiving coverage, and you wondering why your precious monthly contributions aren’t buying company loyalty. Ask yourself this: survey your team early. Ask: Do you currently have coverage through a spouse or elsewhere? What benefits matter most to you? (e.g., low deductible, pediatric care, mental health, etc.) Would you prefer a group plan, or using an HRA to pick your own? These conversations clarify whether you’re better off subsidizing a traditional small-group plan, offering a QSEHRA, or even steering employees towards the SHOP Marketplace options. It’s the difference between wasting money and seeing a solid ROI on your benefits spend. Summary: Navigating Your Options When Employees Get Insurance Through Spouses Confirm and Document Waivers. Always get proof of other coverage before letting employees waive your plan. It protects you from participation headaches. Understand Participation Requirements. Too many waivers can spike your premiums or jeopardize group rates. Calculate Real Costs. $200-$300 monthly per employee is a starting point; factor in subsidies, admin fees, and participation dynamics. Evaluate HRAs vs. Traditional Plans. HRAs can cap costs and empower employees; traditional plans offer predictability if participation is solid. Leverage SHOP Marketplace and Tax Credits. These can reduce costs significantly but come with their own rules. Engage Employees Early. Their input prevents costly misfires in choosing the right benefit model. Final Thoughts: Insurance Is Like Car Maintenance — Ignore Warning Signs and Prepare for a Breakdown Just like skipping oil changes or ignoring the check engine light, not managing how your employees get insured can blow up your budget and morale. Don’t assume everyone fits neatly into a group plan. Use the right tools, gather good info, and don’t be shy about shaking up traditional models if it saves you cash and headaches. Need help sorting through your options? Reach out to someone who’s been knee-deep in small biz insurance battles — and has the spreadsheets and scars to prove it.