Spousal Carve Out Insurance

Give Us Some Credit

After two years of working in a temporary job as customer-service representative, Debra Banks was offered the job permanently. She was sent a hire letter, set a start date, and confirmed her new salary. But there was a hitch: To get the job, Banks had to undergo a credit check.

They wouldn't be strict, a company representative assured her; after all, Banks had already worked at the firm for two years and consistently received high praise for her work. But when the credit report came back showing unpaid bills from a recent hospitalization, the company rescinded the offer. Her contact at the staffing agency told her the bad credit report was to blame.

Banks returned to temp work, only to yet again be denied a permanent job because of her credit history. Then she was laid-off from the temp position as well. "It made me feel worthless as a person," Banks confesses. "Unfortunately my credit has not improved ... I haven't been able to get a job to improve it."

Banks's case is hardly an isolated one. Today, six in ten employers say that they check the credit histories of some or all prospective employees before making final hiring decisions. This traps many jobseekers in what workplace advocate Nat Lippert describes as a devastating catch-22: They can't attain employment because of poor credit, yet they can't pay off bills and improve their credit without income from a job.

A growing number of states are also taking action to restrict the use of credit checks in employment. Hawaii, Illinois, Oregon, Washington, Maryland and Connecticut have passed legislation limiting the use of credit checks in hiring, firing, and promotions. More than 20 other states, including California, New York and Tennessee are considering bills. The moves are, in part, to help good employees like Banks get jobs they deserve, but also address a more fundamental problem: There's no real evidence that the practice is good for employers, either.

Companies justify the credit checks by saying they need some way to assess a job applicant's reliability and character. Credit checks have been aggressively marketed to employers by for-profit credit bureaus to do just that. Yet it's far from clear that running credit checks benefits employers. The only available rigorous study of employment credit checks concluded that there's no correlation between credit history and job performance. Even industry representatives admit this.

Can an employer force your spouse to take their employers ...

No, it is not legal. If your husbands employer offers spouse and family coverage, then they cannot deny your coverage. You can choose to both go under his, both go under yours, or each of you select your own employers. It’s almost always cheaper to both go with a single employers plan and deny coverage at the other.

Now – saying that it’s not legal doesn’t stop the company from making things tough on your husband. Many companies now self insure. They use a major carrier to administer their plans, but when the claims come thru, the company pays them. So, they know who is costing them money. And, they may use that to lay him off in the future (though this would never be the disclosed reason for the layoff). The company is trying to manage labor costs. If your husband costs them $75,000 in salary, and another $10,000 in 401(k) and other insurance benefits – then that $85K quickly rises to $93K for just his health insurance. Add you, and they are looking at about $97K. Add a child, and now he’s costing them $100K. As you can see, you’re costing the company money. If another employee is just as good, they would rather go with him if he’s single. It’s all in the accounting numbers. Your husband looks single if you’re covered by your companies insurance plan.

Yes, it is legal. Someone else asked this question within the past week or so…you can do a search and review the answers to their question too.

Its not uncommon these days for an employer to require that a spouse also be enrolled on their own employer’s benefit plan (if available) as primary. Often, the employer has to choose between doing that or slashing the benefit package for everyone…obviously, requiring a spouse to enroll as primary under their own plan would be better for the majority of people vs. slashing everyone’s benefits.

My own employer actually has that requirement – a spouse must enroll in their own coverage, if their employer makes single coverage available to them for under $120 a month. (That spouse is still welcome to enroll in my employer’s plan as secondary.)

Check the benefit plan description for the company (may also be known as summary plan document or certificate of coverage)…as long as the employer spells out the requirement in there and the same rules apply to all employees in the same classification, then it is legal.

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Kiplinger's Personal Finance

Kiplinger's Personal Finance