Marriage Equality Means Changes for Health Insurance
Last Friday’s Supreme Court decision overturning state bans on same-sex marriage will have implications for the employer-based benefits system. The 5-4 decision in Obergefell v. Hodges determined that marriage, regardless of sexual orientation, is a fundamental right under the Constitution’s Equal Protection Clause and states do not have a right to deny marriage to same-sex unions. Prior to the decision, same-sex marriage had been legalized in 37 states.

We know that this ruling evokes strong feels among many on both sides of the argument but, for NAHU and health insurance agents and brokers, the most important thing about the ruling is that now there will be standardization across the country for how employers treat employees for spousal benefits. Previously, employers had to navigate a messy patchwork of laws across states to determine whether benefits would need to be extended to same-sex spouses. Last week’s ruling, effective immediately, will help to clear up some of the confusion for employers uncertain of whether they legally need to offer coverage to same-sex spouses. It will also help to clear up confusing plan administration for some domestic partnership couples who could now become legal spouses.

Kaiser Family Foundation survey last year found that while nearly all employers offered coverage to spouses, only half allowed same-sex partners to claim insurance benefits if they weren’t legally married. The ruling may lead to some employers dropping coverage for domestic partnerships and instead only offering to legally wed spouses. Prior to the ruling, Verizon, Delta and IBM, among other companies, had rescinded coverage to domestic partners who lived in states with legal same-sex marriage.

The ruling will be applied differently for fully insured plans and self-insured plans. Any fully insured plan will be required to extend coverage to spouses regardless if they are same-sex. However, self-insured plans have more discretion, as there is no legal requirement that a self-insured plan include a same-sex spouse. Companies with religious objections to extending benefits to same-sex spouses could theoretically self-insure to avoid offering coverage, but legal scholars warn that companies may open themselves up to discrimination lawsuits in the future should they decide not to offer benefits to same-sex spouses. A patchwork of different state laws relating to non-discrimination of benefits may further complicate this.

The Supreme Court ruling will also force changes for Medicaid and the health insurance marketplaces. The 2013 ruling that struck down the Defense of Marriage Act led CMS to encourage states to recognize same-sex marriages performed in another state when the state the couple resides does not recognize same-sex marriage, leading to a gray area in how benefits would be applied. The ruling last week will require all states’ Medicaid programs to recognize all legally wed spouses. The ruling will also impact same-sex households applying for tax credits on the exchanges, where they may previously have been treated as individuals but can now apply as a married couple.

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