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Should You and Your Spouse Have Separate Health Insurance Plans?

 Spouses tend to be covered on the same health insurance policy. But that's not always possible, nor is it always the option that makes the most sense. Let's take a look at the rules that apply to spousal coverage, and the questions you should ask before deciding whether or not you and your spouse should—or can—be on the same health insurance policy.

Out-of-Pocket Exposure

Families need to consider the total out-of-pocket exposure of whatever health plan or plans they have or are considering. The Affordable Care Act (ACA) imposed an upper cap on total out-of-pocket costs (for in-network treatment of essential health benefits), which is adjusted for inflation each year by the Department of Health and Human Services.

In 2021, the upper limit for out-of-pocket costs is $8,550 for a single individual and $17,100 for a family.1 (These limits do not apply to grandmothered or grandfathered health plans).

But the family out-of-pocket limit only applies to family members who are all covered under a single policy. If the family is split up onto multiple plans—including employer-sponsored insurance or individual market coverage—the family out-of-pocket limits apply separately for each policy.

So if a family opts to have one spouse on one plan and the other spouse on a separate plan with the couple's children, each plan will have its own out-of-pocket limit, and the total exposure could be higher than it would be if the whole family were on one plan.

Note that Original Medicare doesn't have any cap on out-of-pocket costs, and this didn't change with the Affordable Care Act; Original Medicare enrollees need supplemental coverage—either a Medigap plan, a Medicare Advantage plan, or coverage from a current or former employer—to limit out-of-pocket costs.

Healthcare Needs

If one spouse is healthy and the other has significant medical conditions, the best financial decision might be to have two separate policies.

The healthy spouse might choose a lower-cost plan with a more restrictive provider network and higher out-of-pocket exposure, while the spouse with medical conditions might want a higher-cost plan that has a more extensive provider network and lower out-of-pocket costs.

This won't always be the case, particularly if one spouse has access to a high-quality employer-sponsored plan that will cover them both with a reasonable premium. But depending on the circumstances, some families find that it's prudent to pick separate plans based on specific medical needs.

Implications for Health Savings Accounts

If you have a Health Savings Account (HSA) or are interested in having one, you'll want to be aware of the implications of having separate health insurance plans.

In 2021, you can contribute up to $7,200 to a health savings account if you have "family" coverage under an HSA-qualified high deductible health plan (HDHP). Family coverage means at least two members of the family are covered under the plan (ie, anything other than "self-only" coverage under the HDHP). If you have an HSA-qualified plan under which you're the only insured member, your HSA contribution limit in 2021 is $3,600.

It's important to understand that although HDHPs can provide family coverage, HSAs cannot be jointly owned. So even if your whole family is on one HDHP and making the family contribution amount to a single HSA, it will be owned by just one family member. If you and your spouse want to have your own HSAs, you can each establish one and split the total family contribution between the two accounts (note that although HSAs are not jointly owned, you're allowed to withdraw money to cover medical costs for your spouse or dependents, just as you can for your own medical costs).