New Supreme Court Ruling on Same Sex Marriage May Impact Spousal Coverage Under Your Group Health Plan
A new U.S. Supreme Court ruling regarding same sex marriage may require employers to revise their spousal group health coverage rules.
On June 26, 2015 in the case of Obergefell v. Hodges, the U.S. Supreme Court held that the 14th Amendment of the U.S. Constitution requires all states to license a marriage between two persons of the same gender. Further, since same sex marriage must now be available in all states, each state must recognize a marriage between two persons of the same gender when performed legally in another state or jurisdiction. The ruling takes effect immediately.
Spousal Coverage Under Group Health Plans
The U.S. Supreme Court ruling does not address its impact on employer group health plans. Most employer group health plans are subject to the federal law known as ERISA. ERISA permits an employer to prescribe the eligibility rules for spousal coverage in the plan document. If the eligibility rules are clearly set forth, they generally are enforceable.
However, the Equal Employment Opportunity Commission (EEOC) has indicated that it believes discrimination relating to sexual orientation with respect to the terms and conditions of an individual’s employment, including employer group health coverage, may constitute employment discrimination under Title VII of the federal Civil Rights Act. The Obergefell case will make it more likely that the EEOC will assert an employment discrimination violation with respect to an employer offering group health coverage to opposite sex spouses but not same sex spouses. For this reason, employers should review the definition of spouse in their group health plans and consider changes.
Domestic Partner Coverage Under Group Health Plans
Some employer group health plans also extend coverage to domestic partners who are not legally married to the employee. Many employers, particularly those operating in states like Michigan which have not permitted same sex marriage, have chosen to do so only for same gender domestic partners in recognition that same-sex marriage is not available. Now that same gender marriage will be legal throughout the country, this reason for allowing domestic partner coverage is no longer present.
Further, particularly following the Obergefell ruling, to only offer domestic partner coverage to individuals of the same gender as opposed to all domestic partners (whether of the same or opposite gender) may trigger employment discrimination claims. In other words, employees with opposite gender domestic partners may take the position that they are being discriminated against. As a result, employers offering domestic partner group health coverage may need to open up the coverage to partners of both the same or opposite gender. On the other hand, because same-sex marriage will now be available in all 50 states and because of the adverse tax consequences associated with domestic partner health coverage (usually the value must be included in the employee’s income), employers currently offering domestic partner coverage may want to consider discontinuing it.
Finally, don’t forget spouses are typically eligible for more than just medical coverage through an employer. For example, spouses may be eligible for dental and vision benefits, their expenses may be eligible for reimbursement under the employer’s flexible spending accounts and the employer may offer spousal life insurance. The definition of spouse under these other benefit plans should also be reviewed in light of the Obergefell decision.
If you have questions concerning the Obergefell case or this article, please contact the author or any other member of the Miller Johnson Employee Benefits practice group.