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Coordinating Employee Benefits with Your Spouse

If you are a two-earner couple, each of you probably has a long list of your own company's benefit options to sort out and choose from. And each of you may be covered under your spouse's company plan. To minimize your cost and obtain sufficient coverage from these benefits, it is important that you evaluate the features and the associated costs of both sets of benefits packages. Make a comparison chart for each type of benefit, listing cost (such as deductibles and copayments), features, and other relevant information. Take your time and evaluate each benefit thoroughly. Remember to put together the package that is best for your current situation as well as for your future needs.

Most companies provide employees with a variety of benefits. These generally include medical insurance, dental insurance, and other health and welfare benefits. To obtain these benefits, employees usually have to pay some portion of the cost, typically on a pre-tax basis, which lessens the cost. You probably are able to change your benefit options and the dependants you are covering under the plan only during an annual enrollment or when you have a qualified family status change. Because you and your spouse may have annual enrollments at different times of the year, you should identify the enrollment periods of each company plan to ensure that there is no gap in coverage for you and your family.

If you're married and each of you are covered separately on your own employer's plans, should you be covered as a dependent on your spouse's plan?

It's typically not necessary to pay for additional coverage when you may not get reimbursed under more than one plan, or the reimbursement from the second plan wouldn't be large enough to justify the additional premium costs. Whether or not the second plan pays and how much, depends on the form of Coordination of Benefits (COB) the employer is required or chooses to use.

In most cases, you must submit your bills to your employer's plan first. After the primary plan pays, you can submit your bills to your spouse's plan. But your spouse's plan may pay very little or nothing at all. If your child is covered on both plans and both plans follow the birthday rule, the plan with the spouse whose birthday falls earlier in the year will be considered the primary plan. If both plans do not follow the birthday rule, the father's plan will typically be considered the primary plan.

If you're covered under your employer's plan and your spouse is self-employed or doesn't have coverage, should your spouse consider having his or her own individual medical coverage? The answer is probably no: Pick him or her up on your plan. It is likely the most affordable, and generally, the most comprehensive way to get coverage.

Your first question should be: Is the cost of coverage for your spouse in your company plan a good deal?

Here are some things to think about when making this determination:

  • In general, the cost of coverage for a spouse in a company plan is usually cheaper than in individual insurance plans. If your employer passes on a very high premium to you for coverage for your spouse and family, it may be worth investigating the cost of an individual plan for them. Contact a few medical insurance companies in your state and get information on their features and pricing. Also contact an HMO that serves your area or an association you or your spouse belongs to. Premiums may be more competitive and the coverage more comprehensive, depending on the state in which you live. This will serve as a valuable comparison to the company-sponsored plan.
  • Can you receive a refund for waiver of medical coverage from your employer? If you opt out of your company's medical plan, you might be entitled to a refund of the premiums that the company would have paid for you. Sometimes, a company medical plan may not offer coverage that is cost competitive with a comparable outside plan, so opting out may be a consideration for you.

Tax Considerations Regarding Your Employee Benefits

Be sure to take these tax-related factors into consideration when deciding on a benefits plan:

  • Health insurance premiums that self-employed people pay may be tax-deductible. Check with your tax professional regarding what is deductible.
  • Medical expenses attributable to your spouse may be reimbursed through your company-provided health care flexible spending account. Determine the amount you should contribute to the account to take advantage of the tax savings.

Other Factors Affecting Your Decisions on Employee Benefits

Before you come to a final decision on what plans to use, there are some other non-monetary factors that may affect your decision.

  • How long will the company-employed spouse continue to work? One of you may be considering leaving work for a period of time, for example to have children. The one leaving could elect to take a Family Leave of Absence for up to 12 weeks, or if actually terminating employment, could take COBRA coverage* for up to 18 months. The terminating spouse might want to consider electing coverage as a dependant under the other spouse's plan, since it may be less expensive than COBRA coverage and could continue for a longer period of time.
  • Is the company experiencing financial troubles? If the company does go out of business, the insurance plan may be in jeopardy.


* COBRA coverage extends existing health coverage for a period of time following the termination of employment.

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