Disney has given us some pretty memorable couples over the years. Mickey and Minnie. Carl and Ellie. Mr. and Mrs. Incredible. WALL-E and EVE. Disney has spent decades telling us that these couples belong together.
So we can't believe they're carving out Minnie.
Starting in 2027, Disney will stop covering spouses and domestic partners on its U.S. medical plans if they have access to health insurance through their own employer. The kids can stay on the plan. The spouse has to find coverage somewhere else.
Why this isn't really about minnie
It's an amusing way to describe a pretty serious problem. And I don't think Disney is particularly unusual here. Employers across the country are looking for ways to manage the rapidly increasing cost of healthcare: the average family premium hit $26,993 this year, up 6%, compared to general inflation of 2.7% and wage growth of 4% over the same period, according to KFF. Spouses with access to another employer's plan are an obvious place to start.
I understand why Disney made this decision. A spousal carveout is one of the many sticks employers can use when rising healthcare costs leave them looking for ways to change where families get their coverage.
Companies with strong offerings can attract employees from companies with less generous coverage. When those employees bring their families onto the plan, the employer can end up absorbing costs that otherwise would have been covered elsewhere. Over time, that's adverse selection for employers providing rich benefits.
The traditional response is to fight fire with fire. If other companies are effectively pushing their healthcare risk onto your plan, you push spouses back onto theirs through a surcharge or a carve-out.
From a finance perspective, that makes sense. From the employee's perspective, it's a much harder conversation. I'm sure Disney's HR and finance teams didn't want to tell employees that their spouses were no longer eligible for coverage. They're dealing with the same healthcare cost increases every other company in America is dealing with, and eventually something has to give. But when an employee has built their family's healthcare around their employer's benefits, being told that their spouse has to find coverage somewhere else is a significant loss.
The other Levers, and why they fall short
I expect more employers to follow Disney's lead.
As healthcare costs continue to rise, employers are going to keep looking for ways to reduce the amount of risk sitting on their health plans. Spousal surcharges and carveouts are one lever. They're not the only one, and most of the others have the same problem: they either alienate employees or they don't actually reduce cost or risk once you look past year one.
Raising deductibles shifts spend onto employees, but the plan still carries the risk of a high-cost claim. It just means employees pay more before that risk shows up on the employer's books. Cash opt-outs pay employees a flat amount to decline coverage, which sounds efficient until you notice who takes the deal: healthy employees with cheap alternatives elsewhere. The people driving cost stay enrolled, and now there's a new program to administer on top of it. A standard HRA adds funds on top of the existing plan, but the family never leaves. The liability that made the plan expensive in the first place is still sitting there. It's a new line item, not a fix.
Look at the pattern. None of these get an employer out of the tug-of-war I described above, the one where richer benefits attract employees whose families would've been someone else's cost, and now they're yours. A surcharge or a carveout pushes back by making it painful to stay. A deductible increase or a cash opt-out pushes back by making it expensive to stay. Either way, the employer is still playing defense against its own plan design, and the employee is the one who feels the stick.
There's another option on the table, and it doesn't need a stick at all, just carrots. That's why we built the Total Care Option.
There's another option
Roughly 30% of employees have access to coverage through a working spouse, and those households typically represent about 40% of an employer's healthcare costs. Hence, Disney's decision to focus on reducing cost by focusing on the spouse.
Health insurance has traditionally forced a tradeoff for employees. Pay less from each paycheck, and you save on premiums, but an unexpected diagnosis or a bad year leaves you exposed to thousands in out-of-pocket costs. Pay more from each paycheck, and you get more protection if you need it, but if you stay healthy, you've spent thousands on coverage you barely touched. Employees have had to pick one of those two paths, and neither one is really a win.
The Total Care Option is a third path. Instead of telling a family "your spouse can't be on our plan anymore," an employer can give that family a financial reason to consider the spouse's plan instead, one that removes the downside of an unexpected healthcare cost without simply raising what comes out of every paycheck. The employee and family enroll in the spouse's group health plan, and the employer reimburses eligible healthcare expenses through an HRA, covering up to 100% of deductibles, coinsurance, and copays. The HRA can be designed to reimburse premiums too.
For the employer, the family's premium and claims exposure move off the plan along with them. For the employee, the family gains another coverage option with meaningful financial support behind it, without the tradeoff they'd normally have to make. That's a very different conversation to have during open enrollment.
Fight fire with water
The Total Care Option gives employers another lever, one that lets them say something closer to: We know healthcare is expensive. We know your family may have another coverage option. If that option works better for you, we'll help pay for your healthcare costs.
That's a pretty good benefits story, and it doesn't have to replace what an employer is already doing. Healia doesn't require pairing the HRA with a surcharge or carveout; some employers layer it on top, others run it on its own. Either way, the employer has a choice they didn't have before.
One employee put it more plainly than I could: "Healia has made such a meaningful impact on my family. If my company ever removed this benefit, I'd consider looking for a new job because it makes that big of a difference." That's the kind of loyalty a stick can never build.
The households that actually move
One of the biggest misconceptions about a spousal HRA is that success means getting as many people as possible to enroll. In practice, the households most likely to use the benefit are the ones with the greatest financial incentive to move, and those tend to be the same households generating a disproportionate share of the employer's healthcare costs.
That raises the obvious objection: isn't that just adverse selection working against you? If the households who benefit most are also the ones driving the most cost, aren't you handing your priciest families a reason to leave and calling it a strategy? That's the point of the design. Medium- and high-cost households have the most to gain from reimbursed healthcare expenses, so they're the ones who act on it. And because the employer only reimburses claims employees actually submit, up to a cap, that cost never turns into an open-ended bill. You're paying for real expenses as they happen, not underwriting a guess.
Compare that to a cash opt-out, the same lever I mentioned earlier. There, it's the healthiest, cheapest employees who take the money and leave, while the expensive population stays put. The Total Care Option runs in the opposite direction. The families most likely to move are the ones whose claims were driving costs in the first place, so the risk left behind actually goes down.
We've seen this firsthand. One broker told us about a group where just 14 employees enrolled in the Total Care Option. Those 14 households had generated more than $2.5 million in claims the prior year. That's why enrollment count isn't the number that matters; the cost tied to the households that move is.
For a self-funded employer, moving a high-cost family to another group health plan removes those claims from the employer's plan and reduces claims exposure. For a fully insured employer, moving eligible households reduces the cost of covering those families and creates room in the benefits budget. And the employees who move get a benefit that can reimburse up to 100% of their eligible healthcare expenses.
Great employers shouldn't have to choose between great benefits and sustainable costs
Disney's decision is evidence that healthcare costs have gotten high enough that even companies with some of the strongest brands and deepest pockets are changing how they provide benefits.
Disney chose a carveout. Other employers are considering surcharges. There is another option. The Total Care Option lets employers reduce the risk on their health plan while giving employees a meaningful benefit that helps pay for their healthcare, and for employers that have spent years competing on benefits, that's worth considering.
You don't have to fight fire with fire. You can fight fire with water.