Choosing the Right Benefits with Your Spouse
Whether you're newly married or you tied the knot years ago, it's important to review your available benefits options together every year. For many couples, benefits can be confusing, especially when both spouses have access to health and supplemental insurance through their employers. Consider these tips when your next enrollment comes around.
The first step is to decide whether to choose a family plan or each have your own individual plan. Not all employers will allow a spouse to join an insurance plan when the spouse can get coverage from their employer, but some do. If this is available to you, be aware of any "spousal surcharges" your employer may require.
You should then carefully review the coverage options and evaluate which plan has the best coverage you can afford. Spending a little bit more may be a better financial choice if it offers more coverage.
Things You Should Consider
- Do you want to visit the same doctors or clinics? Different plans may have different provider networks.
- Is one spouse healthier than the other? In this case, it may make sense to remain on separate plans depending on your options.
- Do your employers offer health/wellness incentives for being on their plan?
Reimbursement accounts like Health Savings Accounts (HSAs) and Healthcare Flexible Spending Accounts (HCFSAs) have specific rules around their usage for spouses. Let's go through several scenarios to help understand how they can be used correctly.
- Scenario #1: You and your spouse are both on the same health insurance plan with the option for a Healthcare FSA
Flexible Spending Accounts are individual accounts and there is no family contribution option. If you are both on the same health insurance offered by one spouse's employer, only the employee will be able to elect a Healthcare FSA with the individual contribution limit. However, you can both use funds from the Healthcare FSA to pay for eligible medical costs for both your spouse and tax dependents, regardless of the medical insurance in which they are enrolled.
- Scenario #2: You and your spouse are both on the same health insurance plan with the option for an HSA
If both spouses are on the same qualified High Deductible Health Plan (HDHP), their combined contribution limit is the annual statutory maximum amount for individuals with family-qualified HDHP coverage ($7,100 for 2020).
- Scenario #3: You and your spouse have elected insurance through your respective employers, with the option for a Healthcare FSA
If both spouses are eligible for a Healthcare FSA through their respective employers, you may both contribute to your individual FSA up to the annual statutory maximum for that year. For example, if you each contribute the maximum of $2,750* to your Healthcare FSAs, you will have a total of $5,500 for your family.
- Scenario #4: You and your spouse have elected insurance through your respective employers, with the option for an HSA
If both spouses are eligible for an HSA through their respective employers, and you both select self-only HDHP coverage, you may both contribute to your individual HSA up to the annual statutory maximum for individuals with self-only qualified HDHP coverage. If either of you elect family HDHP coverage, you may both contribute to an HSA, but your combined limit is the annual statutory maximum for individuals with family qualified HDHP coverage. This combined limited is split equally, unless you agree otherwise. The 2020 contribution limits are $3,550 for single plans and $7,100 for family plans. For 2021, the contribution limits are $3,600 for single plans and $7,200 for family plans.
- Scenario #5: You and your spouse have elected individual insurance through your respective employers, one with a Healthcare FSA and one with an HSA option
If one spouse is eligible for a Healthcare FSA and one is eligible for an HSA, you may only elect one of these reimbursement accounts. These accounts are subject to the same federal eligibility rules as medical plans. For example, if your spouse elects a Healthcare FSA, it automatically can be used to help cover your eligible medical expenses, thus making you ineligible to elect an HSA account through your employer.
Tip: Keep in mind that if either spouse has coverage that is not qualified HDHP family coverage (such as an HMO, PPO, or non-qualified HDHP) that covers both spouses, they’re both ineligible to make contributions to an HSA. However, if one spouse has self-only coverage under a traditional medical plan (such as a PPO), and the other has any coverage under a qualified HDHP (family or individual), the spouse with the qualified HDHP can still use HSA funds for eligible medical expenses for their spouse and tax dependents.
Supplemental Insurance Products
Once you've figured out your medical insurance and reimbursement accounts, don't forget to consider any supplemental insurance products that can help offset unexpected costs or provide benefits directly to you. For many individual products, you will have the option to extend coverage to your spouse or family members, even if they are not on your health insurance. When considering American Fidelity products, your account manager can help walk you through your available options.
AF™ Limited Benefit Accident Only Insurance can help you manage out-of-pocket expenses to treat injuries resulting from a covered accident. Coverage is available for you, your spouse, and/or your children under the age of 26. As you review this policy with your partner, it's important to consider the activities in your lives. If your spouse is active or involved in recreational sports, a policy like accident insurance may be especially wise to consider.
AF™ Limited Benefit Cancer Insurance is designed to help ease the financial pressures of cancer treatment, so you can focus on your recovery. Coverage is available for you, your spouse, and/or your children under the age of 26. When considering this policy, it's important to review both your and your spouse's family history of cancer. The individual cancer base policies are guaranteed renewable for life. This means that as long as you continue to pay the required premiums, your coverage will continue.
AF™ Limited Benefit Hospital Indemnity Insurance is designed to help pay for medical expenses related to inpatient treatment. Coverage is available for you, your spouse, and/or your children under the age of 26 if you are covered by either your employer's or spouse's major medical or comprehensive medical policies.
AF™ Limited Benefit Critical Illness Insurance is a specialized policy designed to pay a lump-sum benefit upon diagnosis of certain covered life-altering illnesses. Coverage is available to you, your spouse, and/or children under the age of 26. This policy can be extended to children at no additional cost.
AF™ Limited Benefit Gap PLAN® Insurance is designed to help pay the deductible, co-insurance, or other out-of-pocket expenses related to inpatient confinement or treatment. For this product, you and your dependents must be covered by your employer's group major medical or comprehensive medical policy to elect this coverage. This means that if your spouse has chosen medical insurance through their employer, they would not be eligible to join this plan with you. However, if your family is under your employer's group major medical or comprehensive medical policy, they would be eligible for coverage.
Plan for the Unexpected
We understand that selecting your insurance coverage can be overwhelming, and we're here to help. Take time during your annual enrollment to discuss your coverage options with your dedicated account manager. They can help you evaluate life changes and make recommendations specific to your situation.
This blog is up to date as of October 2020 and has not been updated for changes in the law, administration or current events.