Recent Supreme Court Ruling Effects

The Supreme Court of the United States released two decisions with impacts on employer based health care in June. King v. Burwell dealt directly with the Affordable Care act, while Obergefell v. Hodges dealt with same sex marriage. Ironically, the second case, Obergefell v. Hodges, has a greater effect on employer based health insurance than the first.

 

King v. Burwell dealt with the wording of the ACA in regards to subsidies only being distributed through State run Exchanges. Thirty-four states chose not to create their own health insurance Exchanges, instead deferring to the Federal Exchange. The case challenged the eligibility of federal subsidies to be offered through the Federal Exchange. The elimination of subsidies in the States using the Federal Exchange would throw the entire law into a tail spin. Ending subsidies would also virtually incapicitate the application of the Employer Mandate. (The Employer Mandate is initiated by an employee receiving a subsidy through the Exchange; If the subsidy ends, the penalty never begins.) The Court ruled that all subsidies are legal and will continue through both Federal and State Exchanges. So, basically, the ACA moves forward with no changes.

 

While the issue of same sex marriage isn’t usually thought of in terms of health insurance, it does have a significant impact. Immediate family members are typically eligible to receive benefits under an employer based health plan. Spouses and children of a married employee are eligible to enroll in an employer plan. With the definition of marriage now including same sex relationships this only expands the number of people that can be covered. With the Court’s decision in Obergefell v. Hodges same sex marriages are now legal in all 50 states. This means employers must offer family and dependent coverage for benefits to employee dependents in same sex marriages.

So, what actions must an employer take with regard to Obergefell v. Hodges? First and foremost they need to be sure they are expanding eligibility to their plan with this decision in mind.

Next, employers must consider where costs can be controlled. In the past when a plan was established employers may have offered coverage to domestic partners. This was prior to same sex marriage being legal and a way for employers to enable their same-sex employee partners coverage. While this did offer access to benefits, it also opened the door to non-married heterosexual couples to gain access to an employer’s plan. Employers looking to contain costs can end any domestic partnership eligibilities, limiting access to their company plan, thereby helping to keep cost in check.

For questions on this or others relating to the costs and factors affecting your benefits plan, please feel free to reach out to us.