Case Study

Spousal Surcharge Could Lead to Significant Savings

Banyan detected that covered spouses consistently cost our client more per capita than employees (25.8% in 2008, or $991 PMPY more). Furthermore, regional differences in the employee benefits market—across the client’s footprint—are leading employees living in higher-cost markets to cover a disproportionate number of dependents based upon the client’s unitary employee contribution strategy.

Banyan recommended enhancing the contribution strategy based on geography, encouraging employees to review all benefits options available to one’s family and fully recognize the value proposition within the company’s plans. In addition, Banyan recommended a formal spousal surcharge between $100-$200 per month. Banyan suggested that the client further expand its forward-thinking wellness initiatives and incentives to include covered spouses—prior to this point spouses were excluded from both the health risk appraisal process and wellness-related incentives.

Banyan projects that introducing a $50 per week ($200 per month) spousal surcharge will drive 40% of the current spouse population from the plan. This would equate to $18.4M in annualized savings. If the client targets its wellness activities to incorporate spouses, Banyan is confident that management of the remaining spousal population will better align annual employee and spousal claim cost. This change would translate into an additional $3.8M in savings.