What is spouse insurance? From ACA basics to ICHRA integration

What is spousal insurance? A thousand-foot view

Under the Affordable Care Act (ACA), spouse insurance can refer to the ability of married individuals to join one another’s employer-sponsored health insurance plans. 

This can take place during the open enrollment period each year or within 30 to 60 days of getting married (even if it’s outside the open enrollment timeframe). Marriage counts as a qualifying event that allows health insurance changes to occur outside of a carefully defined period. The length of this so-called “special enrollment period” for marriage depends on the type of coverage. For traditional group plans, insurance carriers must allow individuals at least 30 days after the date of marriage to enroll themselves or their spouse. For individual plans purchased in the health insurance marketplace, including those purchased in connection with an employer-sponsored individual coverage health reimbursement arrangement (ICHRA) an individual can enroll themselves or their spouse up to 60 days after marriage.

If a new spouse isn’t added to the insurance plan within the special enrollment period, they must wait until the next open enrollment period. They may be required to provide a marriage certificate and/or other documentation. 

What is spousal insurance with ICHRA?

ICHRAs allow employers to reimburse their employees for individual health care policy premiums, in part or in full. Employees are empowered to choose a plan that dovetails with their requirements and budget, including family plans.

Family health insurance plans are ones that include two or more people, with a common scenario being the employee, their spouse, and any children under the age of 26. To the question of, “What is spousal insurance with ICHRA?”: an employee’s spouse can receive health care coverage when a family plan is chosen and premiums are paid through ICHRA allotments.

Now, here’s another common spouse insurance scenario. Let’s say that Michael and Maureen are married. Maureen is offered a traditional group plan through her workplace, and Michael’s workplace offers the ICHRA structure. Can Michael go on his spouse’s health insurance policy and still benefit from his employer’s ICHRA contributions? 

• If Maureen is covered by a group plan, then, no. Michael would not be able to use his ICHRA funds towards the group health insurance plan provided by his wife’s employer. 

• If Maureen obtained healthcare coverage through the individual marketplace (ACA), then the answer is that, yes, he can. 

He can use his ICHRA allotment to pay for his part of the insurance premium. If Michael’s employer contains a provision that allows him to pay for spouse insurance, too, then he can use his ICHRA funds to also pay for Maureen’s share. 

If the ICHRA dollars are only permitted for the employee and not the spouse, then Michael and Maureen would need to separately enroll in a health insurance plan to ensure that Michael’s dollars don’t go towards Maureen’s healthcare costs. The reality is that ICHRA programs can cover a broad range of possibilities, depending upon how the employer sets up the plan.

This resource on the pros and cons of having two health insurance policies can help employees understand how this arrangement can reduce their out-of-pocket expenses, which can be especially useful for significant medical bills. (Your company could share this resource with your employees as an educational initiative.) Moreover, having two plans might allow each plan to offer somewhat different services, broadening the available coverage. 

Dual insurance plans, however, can involve more complex paperwork, higher premiums, and possible delays with claims. The way it works is that a person’s primary insurance pays on a claim first, with the secondary plan paying any remaining eligible costs. This can involve more coordination for the couple.

Plans that do and don’t work with ICHRA

First, here’s a relevant distinction: Healthcare insurance plans can be broadly divided into group and individual plans. Group insurance is generally offered by an employer to a pool of employees, with the employer covering some to all of the premium costs. Individual healthcare plans, meanwhile, involve individuals directly obtaining insurance from providers. This includes ACA plans, but it is not limited to them.

With that distinction in mind, ICHRA benefits can cover individual plans, whether purchased through ACA or bought privately, but not with a group plan. They can also cover catastrophic plans for people under the age of 30 or those who qualify for a hardship exemption, Medicare plans (A + B or Part C), and student health insurance. Plans that don’t qualify for ICHRA dollars include short-term insurance with limited duration, fixed indemnity plans, plans that only include vision or dental, and association plans, among other types.

Note: When an employer reimburses through ICHRA (or by other means), this reduces or even eliminates government subsidies provided to the employee to pay for their healthcare insurance. 

Integrating ICHRA with other employee benefits

ICHRA integrates well with and enhances a company’s menu of employee benefits, which can help encourage increased job satisfaction and engagement. People appreciate being treated fairly and inclusively, and ICHRA can help encourage increased job satisfaction and engagement. Employees flexibly benefit from personalized health insurance support in tax-friendly ways, and software tools allow employers to track claims smoothly and effectively to meet the needs of their workforce. 

Explore how to enhance your employee benefits with ICHRA

Streamline your employee benefits plan and magnify its impact through the flexible ICHRA program. Onboard your employees smoothly, enjoy simplified administration and reporting, control employee benefit costs, and facilitate your employees’ ability to personalize their healthcare plans.