On occasion, an employer will find that they have two employees who are married to each other. When faced with this situation, some cost-conscious employers have a practice that restricts the employee benefits plan choices the married employees can make. This can take the form of a policy that bars married employees from each enrolling in single coverage under one of the employer’s plans and instead requires them to enroll in family or employee-plus-one coverage for them to participate in an employer-sponsored plan. When an employer ties HSA contributions to whether an employee elects coverage and/or the coverage type they elect, such a policy would affect the amount otherwise eligible employees could receive based on their marital status.

The above practice can raise potential compliance concerns under ERISA, the ACA and certain state discrimination laws that an employer may not otherwise consider. Below is a brief discussion of some of the key compliance concerns regarding restricting coverage options (and contributions) for married employees working for the same employer. Before adopting such practices, plan sponsors should seek the advice of their employee benefits attorney, who can counsel them.

ACA Employer Shared Responsibility Payment Considerations

Where an applicable large employer has a policy requiring married employees to enroll in family coverage rather than allowing them both to choose single coverage, there are potential penalty risks under the employer-shared responsibility provisions of the ACA.

Under the Affordable Care Act’s employer shared responsibility provisions, applicable large employers (“ALEs”) may face a penalty if 1) they do not make an offer of minimum essential coverage to substantially all full-time employees and their dependents (called the “subsection (a)” penalty) or 2) they fail to make an offer of coverage to a full-time employee that is affordable and of minimum value (called the “subsection (b) penalty”).

An employer could be subject to a subsection (b) penalty if they employ a policy restricting married employees’ coverage options due to a failure to provide affordable coverage to each employee. The affordability requirement and calculation under the ACA is based on the lowestcost employee-only plan, and employers often do not offer affordable family or employee-plus-one coverage. By not allowing both married employees to each elect the affordable single coverage, the subsection (b) penalty is potentially implicated because the policy deprives one of the employees of an opportunity to enroll in affordable coverage.

Regulatory and Legislative Strategy Group