Legality of Spousal Surcharge
I am aware that there are some concerns about the legality of a spousal surcharge and I want to take the time to address this issue with you.
Wisconsin and federal laws allow employers to charge different employee premium rates depending on the number of people covered through the employee’s plan participation. Single rates for employee-only coverage are typically the lowest. Premium amounts increase from there as more family members are covered.
Most health plans, including the School District of Janesville group health plans, require employees to pay a higher premium when both the employee and the employee’s spouse or domestic partner are covered. This higher premium cost is “related” to the employee’s marital or partnership status, but it is really intended to address the question of economics – it costs more to cover two or more family members than it does to cover only the employee.
Many Wisconsin employers, including Wisconsin school districts, have added a surcharge to the employee’s group health plan premium when the employee’s spouse or partner declines his or her own employer-provided group health insurance to enroll in District coverage. The surcharge acknowledges that the spouse or partner has employer-sponsored insurance, is declining that insurance and instead would like to participate in the District’s health plan. This is a legal practice that is now widespread among employers in Wisconsin and across the country.
I have also heard some concerns that confidential proprietary medical information, protected by HIPAA and the Fair Credit Reporting Act, may be at risk because the District is asking if a spouse has employer-sponsored coverage.
HIPAA protects PHI (protected health information). The spousal surcharge requires employees to provide information about whether their spouses have coverage with their own employers. It does not ask for the spouse’s medical information.
The FCRA, Fair Credit Reporting Act, also prohibits employers from requesting medical history for the purpose of conducting an employment background history check or to make other employment-related decisions. Again, the spousal surcharge process does not request or consider the spouse’s medical history.