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United Parcel Service ends healthcare coverage for some employee spouses

United Parcel Service (UPS) ends healthcare coverage

United Parcel Service (UPS) joins a growing number of companies who have restricted or limited their health care benefits in an effort to reduce their costs. UPS announced it will stop providing health care coverage to spouses who can obtain coverage through their own employers.

Although United Parcel Service (UPS) is not the first company to make this type of decision, they have joined the growing ranks of other companies who claim that the costs associated with the new federal health care law, also called Obamacare, have become too costly.

According to United Parcel Service, “Limiting plan eligibility is one way to manage ongoing health care costs, now and into the future, so that we can continue to provide affordable coverage for our employees.” The announcement was made via memo and only affects “about 15,000 spouses, many of whom will have health care coverage available through their own employers.” So the hope is that these employees would retain some type of health care coverage.

What does United Parcel Service decision mean for other companies?

Although the decision by United Parcel Service is disturbing, what should be of greater concern is what this could mean for the future. United Parcel Service (UPS) is one of the biggest companies so far to drop spousal coverage for some segment of its workforce; a move many experts contend could lead to a broader trend for other companies.

Many believe we will start to see other companies follow their lead by restricting health care benefits to employers and their families. Evidence suggests they could be right. For example, large employers like Xerox and Teva Pharmaceuticals have already imposed surcharges for spousal coverage.

So why did United Parcel Service make their decisions?

The answer is always costs, but United Parcel Service (UPS) also claims that because the Affordable Care Act requires employers to provide affordable coverage, “we believe your spouse should be covered by their own employer — just as United Parcel Service (UPS) has a responsibility to offer coverage to you, our employee.”

Who is not affected by the United Parcel Service (UPS) decision?

The good news is the new United Parcel Service (UPS) policy does not apply to the children of those employees. Unionized employees, who belong to the International Brotherhood of Teamsters, are also not affected by the announcement.

Under Obamacare companies are not required to cover spouses, although they will be required to cover employees and their children. So while UPS may be saving costs they are also making decisions which they believe will follow the letter of the new law.

Several health care experts agree noting other companies were also making these moves partly because the federal health care law does not require employers to provide spousal coverage, but does require them to offer it to employees and their children. United Parcel Service made it clear that it would continue to provide coverage to spouses who did not have it through another employer.

United Parcel Service (UPS) can expect some backlash among their employees. With one expert noting that this move would not be popular among employees.
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