By Lisa Schencker and Bob Herman, Crain News Service
WASHINGTON (June 30, 2015) — The landmark U.S. Supreme Court 5-4 decision June 26 granting all same-sex couples the right to marry throughout the country is significant for civil rights, but it also will likely change the health insurance landscape.
Now that same-sex marriage is legal in every state, more employees will add their same-sex partners to their health plans. But it's also likely that a number of employers will soon drop their domestic partnership benefits and instead require employees to marry if they want to extend coverage to their partners.
Under the Affordable Care Act (ACA), all insurance companies must offer the same individual or group health plans to legally married gay and lesbian couples as those offered to married heterosexual couples. Insurers also cannot refuse to offer coverage to people based on their sexual orientation. Self-funded employers that outsource insurance functions to payers have operated under the same rules since a 2013 Supreme Court ruling.
With the high court's ruling, gay and lesbian workers in all states now should be able to add their spouses to their employer-provided health insurance plans. The decision answered only constitutional questions, so benefits experts believe some logistical questions still need to be answered. But “from an HR, compliance and legal risk perspective, clearly there will be the general belief that benefits will follow that recognition (of same-sex spouses),” said Tony Holmes, a health benefits partner at consulting firm Mercer.
However, if an employer has offered only domestic partnership benefits to same-sex couples because they didn't have the right to marry until now, “then those programs likely are not valid anymore,” said Jen Cornell, a labor and employment attorney at Nilan Johnson Lewis in Minneapolis.
About 77 percent of large employers offer same-sex domestic partner healthcare coverage, according to Chicago-based benefits consulting firm Aon Hewitt. The Human Rights Campaign, an LGBT civil rights organization, estimates two-thirds of Fortune 500 companies offer domestic partner benefits to same-sex employees, and 62 percent of those companies also make such benefits available to opposite-sex employees.
Many companies have offered these plans to gay and lesbian couples as an alternative to full spousal health benefits. But as individual states ratified same-sex marriages, employers have reduced domestic partner plans. Delta Air Lines and Verizon Communications, for example, have already begun eliminating those options.
Raymond McConville, a spokesman for Verizon said the company had changed the way they deliver benefits to make it “fair for all employees.”
Excellus Blue Cross and Blue Shield in New York made the change several years ago when the state legalized same-sex marriage. The insurer, which has 1.5 million members, gave its employees about 15-months notice that to qualify for employer-paid health insurance, partners would have to marry.
“It just made it simpler to administer,” said Jim Redmond, an Excellus spokesman. “It simplified and clarified the parameters of who's eligible for coverage through the company benefit.”
Others may follow, legal and benefits experts say. “There's certainly a very real possibility that many more employers will do something similar,” Mr. Holmes said.
“Those companies are going to have to make a decision,” added J.D. Piro, a national practice executive at Aon Hewitt. “Do we still need to offer domestic partner benefits if people are going to get married? It depends on the needs of the workforce.”
Domestic partnership benefits programs limited to same-sex couples may no longer stand up in court, Ms. Cornell said, particularly in states that prohibit discrimination based on sexual orientation. If an employer kept such a program, limiting it to same-sex couples, it's possible an opposite-sex couple could sue and win, saying they too should be able to claim the benefit.
“Now that they legally can marry in all 50 states, it is a much more viable claim,” said Todd Solomon, a partner in the employee benefits practice group at McDermott Will & Emery in Chicago.
Ms. Cornell said it can also be easier for tax purposes, for employers to drop domestic partnership benefits. Mr. Solomon said it can also save money administratively.
That's not to say, however, all employers with the benefit will drop it. Some employers might not feel comfortable telling their workers they must get married to keep their health coverage, especially because not all states prohibit workplace discrimination based on sexual orientation.
“You can't take this out of the historical and political context, meaning that it is still legal in many states to be fired from your job, for being gay and lesbian,” Mr. Solomon said. “So to require someone to get married and make an outward affirmative statement might put someone's job at risk under state law.”
The Human Rights Campaign urged employers June 26 to continue offering domestic partner benefits “as a sign of sustained commitment to family diversity, inclusion and protection of LGBT employees whose rights outside the workplace are not guaranteed under law in many states.”
“If an LGBT employee is, in effect, ‘outed' by being required to obtain a public marriage license in a state that doesn't provide explicit non-discrimination protections, it could place that employee and their family at risk of being denied credit, housing and public accommodation,” said HRC Legal Director Sarah Warbelow in a statement.
Mr. Solomon said employers that offered domestic partner benefits to both opposite- and same-sex couples might not make any changes. Some employers offer domestic partnership benefits to all parties as a way to attract talent. Such a benefit may appeal to young, heterosexual employees who want to delay or avoid marriage but still have committed relationships, Ms. Cornell said.
At the very least, many large employers view the decision as an administrative weight that is being lifted. “The nation's top employers…will be relieved to be able to treat their employees uniformly, regardless of where they live or work,” said Annette Guarisco Fildes, CEO of the ERISA Industry Committee, a trade group that represents large self-insured companies, in a statement.
Broader health insurance coverage also may help same-sex spouses with lingering health problems. The American Public Health Association filed an amicus brief in support of the plaintiffs, arguing that a ban on same-sex marriage has direct negative consequences on the health of lesbians, gays and bisexuals. Lesbian, gay, bisexual and transgender people often suffer from higher rates of chronic health conditions, such as HIV/AIDS and mental illness, according to an April report from the Kaiser Family Foundation.
“It's clear that marriage equality is not just a civil rights issue, but a public health issue as well,” said APHA Executive Director Dr. Georges Benjamin in a statement. “By ensuring marriage equality for all, the Supreme Court's decision will have a positive impact on the health of same-sex couples.”
This report appeared on the website of Crain's Modern Healthcare magazine, a Chicago-based sister publication of Tire Business.