FAQ Addresses Health Coverage for Same-Sex Spouses

Insurers must offer plans that cover same-sex and opposite-sex spouses equally

By Stephen Miller, CEBS March 31, 2014

The federal Centers for Medicare & Medicaid Services published on March 14, 2014, a frequently asked question (FAQ) response addressing an insurer's obligation to offer coverage to same-sex spouses. According to the new FAQ:

"If a health insurance issuer in the group or individual market offers coverage of an opposite-sex spouse, may the issuer refuse to offer coverage of a same-sex spouse?

“No. ... This section does not require a group health plan (or group health insurance coverage provided in connection with such plan) to provide coverage that is inconsistent with the terms of eligibility for coverage under the plan, or otherwise interfere with the ability of a plan sponsor to define a dependent spouse for purposes of eligibility for coverage under the plan. Instead, this section prohibits an issuer from choosing to decline to offer to a plan sponsor (or individual in the individual market) the option to cover same-sex spouses under the coverage on the same terms and conditions as opposite sex-spouses."

The FAQ confirms that an insurance issuer must offer group plans to employers that cover legally married same-sex spouses under the same terms and conditions that apply to opposite-sex spouses, regardless of the jurisdiction in which the policy is offered or operated, or where the policyholder resides. In effect, it bars insurers from refusing to offer plan sponsors the option to cover same-sex spouses equally, even in states that have passed prohibitions against same-sex marriages.

Employers' Obligations

The new guidance does not address itself directly to employers' obligations, explained Todd Solomon, a partner in the employee benefits practice group of McDermott Will & Emery LLP in its Chicago office, in an e-mailed response to SHRM Online.

Previous federal guidance has directed that coverage of same-sex spouses in employer-sponsored group plans is to be offered on an equal basis with opposite-sex spouse coverage in states that recognize same-sex marriage, said Solomon. "If an employer offers coverage to opposite-sex spouses under an insured plan with an insurance contract in a state that recognizes same-sex marriage, then that plan is required to cover same-sex spouses. This is because the insurance contract definition of 'spouse' will include same-sex spouse as a matter of state law."

Multistate Issues for Employers

What about employers in states that don't recognize same-sex marriages? "These plans can continue to deny coverage to same-sex spouses, but they do so at the risk of facing discrimination claims under applicable law," said Solomon. "Things get tricky for employers that have employees in multiple states, some of which recognize same-sex marriage and others that do not."

Writing in the first quarter 2014 issue of Benefits Quarterly," attorneys Daniel Schwallie and Allen Steinberg note that regarding an employer's obligation to provide coverage to same-sex spouses:

"In states that recognize same-sex marriage, there may be other legal reasons to treat same-sex marriage and opposite-sex marriage the same. But if an employer is located in a state that does not recognize same-sex marriage, and if that employer seeks to demonstrate its opposition to same-sex marriage, health care may provide a way to manifest such opposition. Again, we anticipate that most employers will apply spousal coverage and subsidies uniformly to same- and opposite-sex marriages. However, such uniformity is not required."

Solomon agrees, but adds "there is almost certainly soon to be a lawsuit against an employer that continues to deny coverage to same-sex spouses. It will most likely be fashioned as a sex discrimination claim under Title VII. So while I generally agree, it seems remiss to not mention the risk and how much larger a risk it is now that Section 3 of DOMA [Defense of Marriage Act] has been found unconstitutional."

IRS Issues Retirement Plan Guidance

IRS Notice 2014-19, issued on April 4, 2014, provides further guidance for qualified retirement plans about the treatment of marriages of same-sex couples. Specifically, the notice calls for a retirement plan to be amended if it defines “spouse” only as a person of the opposite sex.

The notice applies to spousal consent, survivor benefits, qualified domestic relations orders (QDROs) and other plan administrative functions, and adds to previous IRS guidance addressing benefit issues involving an employee's same-sex spouse (see the SHRM Online article, "IRS Issues Guidance on Retirement Plans and Same-Sex Spouses").

Stephen Miller
, CEBS, is an online editor/manager for SHRM.

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