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Benefits Coverage for Same Sex Spouses

The U.S. Supreme Court issued a ruling last Friday prohibiting state bans on same-sex marriage and giving same-sex spouses the same rights as opposite-sex spouses under state and federal law.  Currently, fourteen states ban same-sex marriage.  In regards to health and welfare plans, this landmark case (Obergefell v. Hodges) impacts certain employers from a plan eligibility, enrollment and administrative perspective.

 Key Considerations include:

  • Fully-insured plans - Typically insurance policies follow state definition of "spouse" which will be redefined in a handful of states.  Insurers should issue plan amendments and discuss enrollment period for newly eligibles with impacted plan sponsors.  Plan administrators (e.g., employers) must meet adoption and disclosure requirements for plans subject to ERISA.
  • Self-insured plans - Most plans currently apply the federal definition of "spouse" which includes same-sex spouses.  Plans that do not offer coverage to same-sex spouses should amend their plans and permit election changes, accordingly.  ERISA requirements apply as mentioned above.
  • Tax consequences - Employers will no longer need to impute income for state tax purposes for any state in regards to employer-provided health coverage for same-sex spouses.
  • Domestic partners - Employers may consider whether to continue providing domestic partner coverage since all individuals now have the choice to be married and may be covered as a spouse.  An employer who decides to remove domestic partner eligibility should provide adequate notice to allow individuals time to get married or find other coverage.

Guidance may be issued from the Department of Labor and the Internal Revenue Service to provide information on timing (including any retro-activity) and other details.

View Summary of Court's decision
View Court Opinion for official guidance

WHAT EMPLOYERS NEED TO KNOW:  Benefit plans and policies should be reviewed to determine what, if any, changes are necessary.  For example, employers whose health and welfare plans currently offer coverage to opposite-sex spouses, but not same-sex spouses, need to amend their plans.  Employers who had to impute income for same-sex coverage will cease doing so.  Employers may consider whether to maintain domestic partner coverage.  And lastly, plan participants and affected individuals must be notified of these changes.