U.S. Supreme Court decision on gay marriage impacts some employer-sponsored benefits

On June 26, 2015, the U.S. Supreme Court of the United States ruled that the 14th Amendment to the United States Constitution compels all states to issue marriage licenses to two people of the same gender and recognize legal marriages between two people of the same gender.

The Obergefell v. Hodges decision was sweeping, all but ending a decades-long battle to bring marriage equality to gay couples. Thirty seven states and the District of Columbia already recognized same-gender marriages before the ruling. Michigan was among 13 states that banned gay marriage through a state constitutional amendment defining marriage to be between one man and one woman.

With this historic decision, all U.S. states and territories can no longer ban same-gender marriage either by state constitutional amendment or popular ballot vote.

Although the decision comes from the highest court of the United States, there are many unanswered questions. The decision did not address matters of discrimination based on religious beliefs, nor did it lay out a step-by-step plan for employers and health insurers to handle the new legislation. This blog specifically focuses on the impact the SCOTUS decision has on employer-sponsored benefits.

Fully insured health plans are now legally bound to recognize same-gender marriages exactly as they would marriages of opposite genders. Although 2013’s United States v. Windsor SCOTUS ruling extended favorable tax treatment on premium dollars paid by employees towards same-gender spouses and dependents coverage, that ruling did not extend those benefits nationwide. The favorable tax treatment of premium dollars now applies to same-gender married couples in every U.S. state and territory.

Small-group employers have always had the option of excluding spousal coverage under their benefit plans. Now, however, the exclusion must be uniform and not directed at same-gender marriages. If an employer disqualifies spousal coverage or requires spouses to take insurance through their own employer prior to enrolling in the company’s plan, the condition must be applied to both same-gender and opposite-gender spouses.

Employers with self-funded medical plans are not forced by the Obergefell ruling to allow same-gender spouses to enroll in their group health plan. It is advised that employers with self-funded plans consider the potential for litigation if they choose, at this point, not to allow same-gender spouses to enroll in their group health plans.

There are still several roadblocks and gray areas due to this ruling: How do groups handle their plan if they already allowed “domestic partners” to enroll? Is there a time limit that vendors will allow domestic partners to become legally married before they disallow coverage? If employers choose to continue allowing domestic partner coverage for same-gender couples, they should be sure to open it to opposite-gender domestic partners, if they did not before.

As always, BCN Services will guide clients and employees through these complexities as they occur. Please encourage your employees to call us with any questions they may have. Timeliness can play a factor, depending on the specific situation

FrankLewandowski_6684

 

Frank Lewandowski, Partnership Manager

Employers should be thinking now about these health care requirements

Recently, the Affordable Care Act (ACA) survived a judicial challenge when the US. Supreme Court ruled in King v. Burwell that individuals who reside in states that have federal exchange programs are eligible for ACA tax credits. Although this ruling changed nothing for employers, many slowed down, or held off implementing changes, while waiting to see the outcome of the case.
Listed below are a few things employers should be thinking about now relating to the ACA:

• Shared Responsibility
The shared responsibility section of the ACA, also known as “play or pay,” does not require employers to provide health care insurance for their employees. Rather, it requires employers to share health care responsibility by offering coverage or paying a penalty. Under this provision, large employers with between 50 and 99 employees may face penalties beginning in 2016. Employers should review their health plan options now to avoid penalties in the future.

• Reporting Requirements
The ACA has prompted changes to the Internal Revenue Code to require reporting that will allow the IRS to collect data and enforce the “play or pay” provision. IRC Section 6055 is used for reporting by providers that offer minimum essential coverage to individuals, including, in some cases, employer-sponsored plans. If the employer is not considered a large employer, and only sponsors a fully-insured plan, they are not subject to reporting under IRC 6055. Section 6056 applies to large employers who offer health insurance under employer-sponsored plans. Large employers offering a self-insured health plan must provide an individualized statement to each covered employee enrolled in a healthcare plan during the 2015 tax year. In some cases, insurers are responsible for issuing the statements for fully-insured plans.

• Cadillac Tax
The Cadillac Tax, effective in 2018, is a 40 percent, non-deductible excise tax imposed on company-sponsored plans with total values exceeding $10,200 for single coverage and $27,500 for family coverage. The tax will be based on the total cost of coverage that exceeds the threshold, and includes employer and employee contributions toward the cost of coverage. Employers would calculate the tax for fully-insured plans and the insurer would pay. Under a self-insured plan, the employer would calculate and pay the tax. According to the IRS notice released in February 2015, additional regulatory clarification may be provided in the future.

• What’s Next?
As we all know, the ACA is ever-changing and can sometimes seem overwhelming, especially for small employers with limited resources. All employers should be planning how to address these changes and will need to closely monitor ACA regulation changes to ensure that they remain compliant.

BCN Services is here to help. If you would like more information or have questions or concerns on ACA, please fill out the form below and we will be happy to send you more information.

DanetteTownsend_6686

Danette Townsend, Benefits Administration Manager