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Home / Commentary / Same-sex marriage decisions have an impact on health plans and other employee benefits

Same-sex marriage decisions have an impact on health plans and other employee benefits

JMandell 2014Federal and local court decisions that require same-sex marriages to be recognized just like opposite-sex marriages have a profound impact on an employer’s employee benefits. Health, 401(k), pension, cafeteria, 403(b), 457, and other plans are directly impacted by these court decisions. Although much of these matters has been clear for over a year (after the U.S. v. Windsor decision), greater clarity, and certainly awareness, occurred on October 15 when the Ninth Circuit Court of Appeals ruled that Idaho’s ban on same-sex marriages is unconstitutional.

The impact of the above, along with federal regulatory pronouncements, differs from plan to plan and employer to employer. This article is the first of a series that briefly explains how Idaho employers must address same-sex marriages with respect to their various employee benefits.

Must an employer make health plan coverage available to a same-sex spouse if such employer maintains a health plan for employees? No. Nothing in the law requires an employer to offer health plan coverage to a spouse, whether that spouse is straight or gay. However, most employers offer spouse coverage, and in that case whether a same-sex spouse must be offered coverage differs depending on whether the health plan is fully insured, self-funded, self-funded with a stop loss policy, and whether the plan is covered under the Employee Retirement Income Security Act (ERISA).

For insured plans, effective January 1, and whether subject to ERISA or not, if an employer extends coverage to spouses, then the coverage must be extended to same-sex spouses. Prior to January 1, the employer that maintains a plan through insurance can choose or not choose to extend the coverage to same-sex spouses. I understand that the Blues are operating their plans consistent with the foregoing. Come January 1, an employer with a plan provided through insurance that wants to offer coverage to a traditional spouse but not to the gay spouse either can terminate the plan altogether for its employees, terminate the plan for all spouses (with appropriate notice, etc), straight and gay, extend it equally to the gay spouse, or finally, as discussed below, switch to a self-funded plan (if that option is otherwise available to the employer).

For self-insured (often called self-funded) plans that are subject to ERISA, both before and after January 1, the employer can choose or not choose to extend coverage to same-sex spouses. Nothing in ERISA nor healthcare reform requires the employer to treat opposite-sex and same-sex spouses alike. Nor does litigation, including in Idaho, require similar treatment of same-sex and opposite-sex couples. A person now, since October 15, has the constitutional right to marry a same-sex person, but that right does not mean that the person also has a constitutional right that such same-sex spouse be covered under health insurance. Statutes or future litigation might establish that right, but not now. If an employer wants to avoid being the first employer in Idaho to be successfully sued for not covering same-sex spouses, then that employer is advised to offer coverage to the same-sex spouse to avoid potentially costly litigation.

Currently, individuals in Idaho can be discriminated against on account of their sexual orientation or gender identification. This was not changed by the courts’ decisions. The “Add the Words” campaign is an initiative to enact an Idaho state law that prohibits such discrimination, for example with respect to employment, housing and public accommodation. Therefore, although a gay couple must be allowed to marry, and a gay couple married legally outside of Idaho must be recognized in Idaho as married, and putting aside for the moment a patchwork of municipal ordinances, an employer can still fire an employee for being gay when, for example, the employee seeks to add his or her same-sex spouse to the health plan.

Some municipalities, such as the City of Boise, have already Added the Words, protecting the LGBT community from such discrimination. Whether such ordinances will be interpreted, revised or enacted to require identical health plan coverage for same- and opposite-sex couples remains to be examined (and brings into play interesting legal questions, such as ERISA preemption.)

What should employers do, and by when? Are employers that are governments, or otherwise not subject to ERISA, subject to the same treatment as discussed above? Our next guest column will address these matters.

Jeffery Mandell is founder and president of The ERISA Law Group, P.A. Since 1982, he has concentrated his practice solely on retirement plans, welfare plans, and other ERISA and deferred compensation matters. 


About Jeffery Mandell