Does the ACA Require Large Employers to Offer Spousal Coverage?
This Q&A addresses whether a large employer, as so defined under the ACA, is required to offer health care coverage to employees’ spouses. As the article explains, the answer is generally “no” — and the large employer wouldn’t be subject to penalties even if an employee’s spouse bought subsidized coverage via a Health Insurance Marketplace.
Question: We’re a large employer with thousands of employees. As a way of reducing our overall benefit costs, we offer only employees and their dependent children coverage under our company’s group health plan. We don’t extend coverage to an employee’s spouse. Would spousal exclusion subject us to penalties under the Affordable Care Act’s employer shared responsibility requirements? Also, what if an employee’s spouse receives subsidized coverage via a Health Insurance Marketplace?
Answer: The failure to offer health coverage to an employee’s spouse would not subject your company to penalties under the employer shared responsibility rules — often referred to as “play or pay.” Under these rules, a large employer is one with at least 50 full-time employees or a combination of full-time and part-time employees that’s equivalent to at least 50 full-time employees. Such employers may be subject to penalties for failing to offer coverage to full-time employees and their dependents.
In this context, “dependents” means an employee’s children, as defined in Section 152(f)(1) of the Internal Revenue Code, who are under 26 years of age (not including stepchildren and foster children). For purposes of employer penalties, the term “dependents” doesn’t include anyone other than an employee’s children, as defined above. Thus, neither your company nor any applicable large employer is required to offer coverage to an employee’s spouse to avoid employer play-or-pay penalties.
Moreover, if an employee’s spouse bought subsidized coverage via a Health Insurance Marketplace, and thereby received a premium tax credit, you still wouldn’t be subject to the penalties. This is because a penalty generally applies only if a full-time employee is certified to the employer as having received a premium tax credit for coverage bought through a Health Insurance Marketplace.