On June 26, 2013, the Supreme Court overturned the Defense of Marriage Act. In 1996 President Clinton signed DOMA into law, explicitly defining marriage in the United States as a union between a man and a woman. By ruling the 1996 law unconstitutional this week, the Supreme Court established that same-sex marriages sanctioned by individual states will now be recognized by the federal government. Prior to the ruling, same-sex couples could not take advantage of federal rights extended to married couples, such as shared benefits, Social Security benefits or inheritance rights, like opposite sex couples could. Now, in the nine states across the country and the District of Columbia that allow for same-sex marriage, all married couples will enjoy the same federal rights, including those related to healthcare.
Impact to the Individual Health Insurance Market
Clearly, the DOMA ruling has some health-reform implications, as it impacts determinations as to who is eligible for Medicaid and who is eligible for federal health insurance premium and cost-sharing subsidies within the exchanges. Overall family income as it relates to the Federal Poverty Level (FPL) is the key factor in determining eligibility for federal assistance; the poverty line varies by size, gradually increasing as the family grows larger. Now, with the federal government recognizing same sex marriages as one family unit and not individuals, their eligibility determinations could change. For example, if one person in a same-sex marriage is earning below the FPL and the other earns more their salaries are now added together. This may raise the family income over the FPL making them ineligible for government assistance to purchase health insurance.
Impact to the Group Health Insurance Market
The ruling also has implications for employer-sponsored group benefit plans. When DOMA was the law of the land, a same-sex couple had to pay more for workplace health coverage even if they were legally married because the partner's health benefits were treated as taxable income. The change in the law now raises a couple of key questions for employers. First, how do employers now treat the taxability of employer-sponsored benefits for same-sex spouses that are already on the group plan? Is there an immediate change in the tax treatment of benefits, and how is that handled with IRS? Also, what about employers with locations and employees in multiple states? A same-sex employee that was legally married in one state now must be treated as legally married in all. If the employer did not previously offer benefit to same-sex couples but did offer coverage to spouses, now they must extend coverage offers to legally married same-sex spouses.
But when will the same-sex couples be able to enroll their spouses in their health plans? As we know, employees usually have to wait until open enrollment before enrolling a spouse in their health plan unless there's a "qualifying life event." If the Supreme Court decision is treated as qualifying life event, employees may be able to add their spouses to their health plans pretty soon. Right now, though, we need to watch for guidance from the IRS and HHS fully implementing DOMA, so stay tuned.