Money Talks | December 2015

The benefits of understanding your employer’s healthcare benefits

By Melissa Myers and Michael J. Tucker, December 2015 Issue.

Melissa Myers: In the months since the Supreme Court’s ruling legalized same-sex marriage across the country, employers are reevaluating health benefits to include same-sex spouses of their employees, as required.

Michael J. Tucker: Yes, and along with these changes, many employers are eliminating healthcare benefits for those in domestic partnerships, unmarried unions or common-law marriages.

Myers: Businesses have found that they must make decisions about who is eligible for spousal or domestic partner coverage under their plans.

Tucker: Indeed. Employers must decide whether they will extend spousal health care benefits to domestic partners who remain unmarried. Some have discarded domestic partner healthcare benefits altogether.

Myers: Prior to the ruling, more than 70 percent of large U.S. companies extended domestic partnership benefits to employees in same-sex domestic partnerships because legally recognized marriage was unavailable to them.

Tucker: Additionally, nearly half of all large employers stretched the definition of “domestic partner” to cover heterosexual couples who had lived together for a certain period of time.

Myers: And that’s no small group. As of 2014, almost 8 million heterosexual cohabiting couples were in the workforce, more than 50 percent of whom ranged in age from 30 to 64. Depriving such couples of healthcare coverage would greatly affect this demographic on the basis that they chose not to enter into a legally recognized marriage.

Tucker: According to an International Foundation of Employee Benefit Plans survey of U.S. employers that provide benefits to same-sex domestic partners, just over 70 percent said they are likely to continue doing so. Yet, 30 percent said they are now unlikely to continue this benefit in view of the Supreme Court decision.

Myers: One of the primary reasons employers in the 70-percent category cited for choosing to continue offering domestic partner benefits was that they want to retain or attract quality employees.

Tucker: Other top reasons stated in the survey were that “we recognize all types of families,” “we feel it is the right thing to do” and that “employees are choosing to stay in domestic partnerships and are not marrying.”

Myers: Conversely, the top reason cited by companies who will discontinue same-sex domestic partnership benefits was: “we provided them in the past because same-sex couples couldn’t legally marry; now they can.”

Tucker: Other reasons cited for not continuing the benefits were focused on administrative complexities and cost issues.

Myers: Companies who had offered benefits to unmarried same-sex couples but not to unmarried opposite-sex couples, typically as a matter of fairness to couples that could not marry, will now likely require marriage as a basis for spousal benefits.

Tucker: It is anticipated that such employers will offer a grace period of several months during which their employees covered by domestic partner coverage can choose to marry if they want to be able to procure spousal health insurance coverage through their employers after the domestic partner health insurance coverage is no longer offered.

Myers: Not requiring marriage as a basis for spousal benefits could raise the issue of whether opposite-sex unmarried couples are being treated unequally.

Tucker: Some employers are concerned that if they continue to offer same-sex unmarried benefits but decline to continue offering opposite-sex domestic partner benefits, they may face reverse discrimination lawsuits in the future.

Myers: Surveys have found that if a company offered partner benefits to both unmarried and opposite sex couples, they will be more likely to maintain those benefits.

Tucker: Then there is the unresolved issue that same-sex couples may not be comfortable making an outward expression of their relationship by getting married.

Myers: Especially in states like Arizona, where discrimination in employment on the basis of LGBT status isn’t legally barred.

Tucker: Employers will not take this decision lightly. And couples exploring the impact of marriage should take time to understand the implications of marriage on their healthcare planning.


Editor’s Note: This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax or legal professional regarding their individual situation. Neither Camelback nor Commonwealth offers tax or legal advice.


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