Can an insurer raise rates on an employee's family policy because a family member chooses not to be insured at their place of work?
Question Details:
My wife, myself, and our child are all covered under the policy she gets through her place of employment. Premiums for our family are roughly $200 per paycheck. On a yearly basis, her benefits package can be altered as far as health insurance and 401K. This year they have a new rule in regards to employees who have their spouse on their insurance policy. The rule is that if the spouse is covered (in this case me), and is offered benefits from his or her place of employment, but chooses not to use them, they will be taking an additional $100 out of each paycheck. Is this legal?
Insurance Law Law Answers
Unfortunately, it is lalmost certainly legal. Notwithstanding all the talk of health insurance "reform," last year, insurers have essentially carte blanche to set rates--including setting the criteria that increase rates. The can have rates increase in a geometric, not linear, fashion from singe to family; they can have rates jump 25 - 25% just because you had a birthday they consider critical for some reason; and they can specify that if a family member who has the option of other coverage does not take, they will charge more. It is very likely immoral and agains the public interest, but it is allowed. The logic is that you are choosing to impose risk of loss or liability on insurer A when you could have put it on B; therefore, A will collect an additional premium, in part to encourage you to not do that.
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