Last week, the Supreme Court ruled that the Defense of Marriage Act, DOMA is unconstitutional, and same sex couples should be afforded the same health benefits as any other married couple.
That means a lot of changes (and potential savings) are on the way for same sex couples. One study by the Center for American Progress and the Williams Institute in 2007 estimated that the average married same-sex couple paid over $1,000 more in taxes each year.
Not only will the government begin allowing its own employees to enroll their partners in the Federal Employees Health Benefits Plan, but couples all over the country will face a new set of rules–that may or may not end up being a good deal.
Some of the immediate benefits:
Tax-free health benefits
Money paid towards employer-sponsored health insurance is all pre-tax. Yet for same sex couples, the money spent on the employee’s partner would be counted as income and subject to income taxes. This could add up to thousands of dollars of taxable income over a year.
Special enrollment rights
Opposite sex couples have always been able to add their spouse to their health plan right away if the partner left their job, lost their own benefits, the couple was newly married, or they adopted a child. These are benefits under the federal regulations HIPAA. But same sex couples would have to wait until the plan’s annual open enrollment, if they were eligible at all.
Access to Medicare, Medicaid, & Tricare
Same sex couples have always been denied coverage for Medicare and Medicaid through their partner, the federal safety-net health benefits for the elderly, disabled, and low-income. They also could not get coverage under their partner’s Tricare benefits, the government’s insurance for military personnel. Now, all of these benefits will be available with the same eligibility criteria as opposite sex couples.
Shared HSA, FSA, and HRA spending
Previously, if one member of a same sex couple had any kind of health savings account or flexible spending account, the funds couldn’t necessarily be spent on their partner’s medical expenses. The partner would have to be an IRS designated tax dependent to be able to use the funds.
But there are also some possible disadvantages:
Insurance Exchange subsidies
Under the federal health insurance exchanges, set to open January 1, 2014, some couples may no longer be eligible for subsidies and tax credits that they could have gotten individually. For example, if each person had an annual income of $35,000, they would each qualify for a federal subsidy on their insurance premiums, separately. But with a combined income of $70,000 they now earn too much money to qualify for a subsidy.
In the same way, the combining of family income to determine eligibility could also disqualify some couples for Medicaid (ironically, since now same sex couples just gained access to Medicaid via their spouse). So at the end of the day, it’s couples who have similar and relatively low income who might lose out.
But all told, there is a lot yet to be determined as states and the federal government iron out policies and procedures, especially, with gay-marriage laws still differing by the state. With thousands of pages of regulations related to marriage and health benefits, it could take awhile for regulators to figure everything out.