On Friday, June 26th, the Supreme Court of the United States issued a decision in Obergefell v. Hodges, holding that all 50 states must license marriages between two people of the same sex and must recognize a same-sex marriage lawfully licensed and performed out-of-state. The decision in Obergefell could have repercussions for both self-insured and fully insured employer-sponsored group health plans.
Under Obergefell, state insurance departments, taxing authorities and domestic relations courts are now required to recognize same-sex marriage. This could have the following effects on employer group health plans:
- Insurance carriers may be required by state insurance regulators to offer same-sex spouses the same coverage and benefits offered to opposite-sex spouses (if not already required).
- Self-insured medical plans that are not subject to state insurance laws may be required by non-discrimination laws to cover same-sex spouses if the plan covers opposite-sex spouses.
- States will align the preferential tax treatment of benefits offered to same-sex spouses with that offered to opposite-sex spouses, which will align with the federal preferential tax treatment.
- State-conferred benefits for spouses will extend to same-sex spouses (e.g., state continuation laws).
- Group health plans providing coverage to adopted children of employees will be required to provide benefits to the adopted children of same-sex married couples who now have the right to adopt. Previously, some states did not allow same-sex couples to adopt, resulting in just one of the two individuals being the legal guardian of the child.
- Group health plans providing coverage to step-children of employees will be required to provide benefits to the step-children of same-sex married couples. Previously, states that did not perform or did not recognize same-sex marriages would not have recognized a same-sex spouse as a step-parent.
- Employers offering coverage to domestic partners with the intention of extending coverage to same-sex spouses may now rescind the domestic partner benefits for those same-sex couples who are not married. If, however, the employer extends coverage to domestic partners of both the same and opposite-sex, that extension of coverage will continue.
The Obergefell opinion will have repercussions throughout the legal landscape that may take time to materialize. Litigations challenging the reach of Obergefell will likely continue for years. Nevertheless, there are a few things employers should consider now:
Employers with fully insured group health plans issued in North Carolina should not experience any changes as a result of the Obergefell decision. After the Windsor decision, the health insurance policy (or contract) language referencing “spouse” was defined to mean “legal spouse,” which extended coverage to all legally married couples even if they lived in a state that did not issue marriage licenses to same-sex couples and/or did not recognize same-sex marriages from another jurisdiction. Following the change to the policy language, the plan should have been administered as extending coverage to both same and opposite-sex spouses. Employers are encouraged to review plan documents and employee communications to confirm that the language is consistent and reflects eligibility for all legal spouses.
Employers with fully insured group health plans issued in a state other than North Carolina may experience changes to the health insurance policy if it was not changed post-Windsor to include same-sex spouses. Employers should plan to extend the offer of benefits to same-sex spouses if it was not done so previously. If the insurance policy (or contract) was changed post-Windsor and same-sex spouses are already included in the class of eligible individuals, there should not be any changes as a result of the Obergefell decision. Employers are encouraged to review plan documents and employee communications to confirm that the language is consistent and reflects eligibility for all legal spouses.
Employers with self-insured group health plans that already extend coverage to same-sex spouses should not experience any changes as a result of the Obergefell decision. Employers are encouraged to review plan documents and employee communications to confirm that the language is consistent and reflects eligibility for all legal spouses.
Employers with self-insured group health plans that limit spousal coverage to spouses of the opposite-sex are strongly encouraged to consider revising the eligibility provisions to extend coverage to same-sex spouses. Although self-insured plans are not subject to state insurance laws, an ERISA preemption defense may longer be viable following the Supreme Court’s finding in Obergefell that marriage is a fundamental right under the Constitution. There is also increased risk under both state and federal nondiscrimination laws for plans defining “spouse” to exclude same-sex spouses. Employers that do not want to extend coverage to same sex-spouses are strongly encouraged to consult legal counsel to thoroughly vet the legal risks associated with continuing to exclude same-sex spouses from an offer of coverage.
The Obergefell decision will likely result in additional guidance from the states and the federal government. To the extent new guidance impacts group health plans, employers should look to their benefits consultant for guidance.