Employee Benefit Plans Must Consider Sexual Orientation and Gender Identity Issues After Bostock
Introduction
On June 15, 2020, the United States Supreme Court issued a decision in Bostock v. Clayton County, Georgia ruling that discrimination based on sexual orientation and gender identity is discrimination based on “sex” that violates Title VII of the Civil Rights Act of 1964 (“Title VII”). Title VII prohibits employment discrimination based on race, color, religion, sex, and national origin. The Court reasoned that it is impossible to discriminate against a person based on sexual orientation or gender identity without discriminating against that individual based on sex. While the decision involved whether employers may terminate employees based on sexual orientation and gender identity, the decision also implicates sex-based discrimination issues for employee benefit plans.
Review Benefit Plans
As a result of the Bostock decision, employers may need to review employee benefit plan documents and policies to identify and avoid potential issues of sex-based discrimination under Title VII. Plan provisions that provide benefits to opposite-sex spouses or domestic partners, but not same-sex spouses or domestic partners (or vice versa), may need to be reevaluated. In addition, group health plan provisions that exclude gender dysphoria treatments, including gender affirmation surgery, may warrant review. This includes evaluating whether individuals who experience a short-term or long-term disability due to gender dysphoria or gender affirmation surgery are eligible for disability benefits. Plans may also need to reconsider policies that deny sex-based benefits based on an individual’s sex assigned at birth, gender identity, or recorded gender (e.g., not covering a hysterectomy for a transgender man or a prostate exam for a transgender woman).
The Court in Bostock did not rule on whether an employer with strongly held religious beliefs would have violated Title VII by terminating employees based on sexual orientation and gender identity. Notably, the Court did not rule on whether application of the Religious Freedom Restoration Act of 1993 (“RFRA”) would have led to a different result. The RFRA protects an individual’s strongly held religious beliefs by prohibiting the federal government from substantially burdening an individual’s free exercise of religion, unless the federal government establishes that doing so is the least restrictive means of furthering a compelling government interest. This may be an area of future litigation. Employers with strongly held religious beliefs should consult with legal counsel to ensure that any desired religious exclusions are met.
Michigan Department of Insurance and Financial Services Bulletin 2020-34-INS
Consistent with the Bostock decision, the Michigan Department of Insurance and Financial Services (“DIFS”) issued Bulletin 2020-34-INS on August 11, 2020 confirming that it interprets “sex” in all statutes and rules under its administration to include sexual orientation and gender identity. Fully insured group health plans should be aware of the bulletin because they are required to comply with the statutes and rules administered by DIFS. Self-funded group health plans are not required to comply with the statutes and rules because of ERISA preemption. It is unclear to what extent governmental or church employers that sponsor self-funded group health plans (but don’t benefit from ERISA preemption) must comply with these statutes and rules. However, it is clear that self-funded group health plans must consider implications of Bostock in certain plan design decisions.
Conclusion
Employers should review employee benefit plan documents and policies to ensure that eligibility rules and coverage for treatments and procedures do not run afoul of the Court’s decision in Bostock. In addition, fully insured group health plans should be aware that DIFS interprets “sex” consistent with Bostock. Plan sponsors may want to consult with their third-party administrators, insurance carriers, and legal counsel to determine how Bostock applies to their specific plans.
If you have any questions, please contact the authors or one of the Miller Johnson employee benefits attorneys.