Health Care and Insurance Benefits and Insurance and Employee Benefits and Health Insurance and Health Care & Insurance

Employers scramble to deal with same-sex marriage

June 26, 2014

Hoosier employers had plenty of questions Wednesday after a federal judge declared Indiana’s ban on same-sex marriages to be unconstitutional.

Most employers offer health, retirement and leave benefits that cover or refer to spouses. But before the ruling by federal judge Richard Young, only about one in 10 Hoosier employers had extended those benefits to same-sex partners.

“There were basically 20 some e-mails yesterday saying, 'What does this mean?'” said Kevin Sliwa, a health benefits consultant for employers at Indianapolis-based MJ Insurance.

Young’s ruling declared that Indiana’s definition of marriage as between one man and one woman violated the 14th Amendment of the U.S. Constitution. His ruling sparked a request for a stay and a plan to appeal by Indiana Attorney General Greg Zoeller. Young is mulling whether to stay his decision, but in the meantime, same-sex marriages are happening in Indiana.

That means employers very likely could see some of their employees get legally married, which typically makes their spouses immediately eligible for benefits.

“People are legally married today, and marriage is a qualifying event” for health benefits, Sliwa said. “And technically, we need to allow those people onto the plan.”

To do that, employers likely need to change the language in their benefits plan documents, eliminating definitions of spouses that say “husband or wife” and instead define spouses as a person “to whom you are legally married in the state in which you reside,” or, possibly, “to whom you were legally married in the state in which you were legally married.”

The number of workers in same-sex domestic relationships appears to be relatively low. According to 2012 data from the U.S. Census Bureau, 1 percent of households in the nation are made up of same-sex couples, and 74 percent of those same-sex households had at least one of the partners employed.

However, the number of employers that currently do not offer medical or life insurance benefits to same-sex domestic partners is high in Indiana—91 percent, according to a 2013 analysis by the actuarial firm Milliman Inc.

Employers that have workers in multiple states have been the most likely to offer such benefits, noted Mike Moffatt, a labor and employment attorney at the Indianapolis office of the San Francisco law firm Littler Mendelson.

“Employers that are just Indiana employers, and don’t have employees that are on a national level, probably haven’t done anything on leave and domestic partners benefits, because they haven’t had to,” Moffatt said, noting that the Indiana Legislature has been trying to pass an amendment to the Indiana constitution that would have strengthened the state’s ban on same-sex marriages.

Wednesday’s ruling does not necessarily require all employers to change their benefits plans, although Sliwa said all of his clients were leaning that way. Still, employers could say they are waiting to offer benefits to same-sex spouses until the court rulings have been ultimately decided. Moffatt expects the numerous federal court decisions striking down same-sex marriage bans to wend their way to the U.S. Supreme Court.

Also, employers that operate their own health benefits plans—called self-funded or self-insured plans—might still be allowed to deny health benefits to same-sex spouses, even in states that recognize those marriages. That is how a federal court in New York ruled earlier this year.

But Moffatt said he would still advise his clients to make the changes now because he expects the costs of not doing so will outweigh the benefits.

 “I also would tell my clients, ‘Do you want to be the case employer that gets sued if you don’t?'” Moffatt said.

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