August 18, 2022

Bucks: Same-Sex Spouses in New York Will Get Health Insurance

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Getting health insurance should become easier for gay couples who decide to marry and live in New York, which recently became the sixth state to legalize same-sex marriage.

Couples that marry will gain a variety of other legal and financial benefits as well, but the ability to add a spouse to an employer’s plan may be one of the more significant. When we calculated the extra costs that gay couples incur because of their inability to marry, health care expenses were certainly among the most onerous — not all employers offer domestic partner insurance, for instance. And even when they do, workers are often taxed on the value of those benefits.

Though the legalization of same-sex marriage in New York won’t entirely level the playing field with opposite-sex married couples, it will certainly help matters. Not only will the same-sex spouses of state workers be eligible for spousal coverage, but the same goes for many employees who work for private employers. According to the state insurance department, an employer that provides coverage to spouses must now also extend that coverage to same-sex spouses who were legally married in New York.

In fact, since New York State already recognized same-sex marriages performed elsewhere, gay couples who were married have been eligible for spousal coverage for some time. The New York State Insurance Department issued guidance in 2008 clarifying its position, noting that same-sex spouses were indeed to be treated as spouses for health insurance purposes (and other insurance matters as well).

Still, there could be some instances were spouses may not be eligible for coverage. Employers who don’t contract with an insurance company but instead pay for health benefits out of their own assets — so-called “self-insured plans” — are not subject to the state’s insurance laws. Instead, the plans are governed by a federal law, the Employee Retirement Income Security Act, known as Erisa, which is likely to rely on the federal definition of marriage (one man and one woman).

So an employer with a self-insured plan could choose to cover same-sex spouses, but it’s not required, said Todd Solomon, a partner in the employee benefits practice at McDermott Will Emery and author of “Domestic Partner Benefits: An Employer’s Guide.”

And since the federal government still doesn’t recognize same-sex marriage, workers with same-sex spouses will continue to owe federal income taxes on the value of their spouse’s benefits, unless they’re considered a dependent. (Heterosexual married couples aren’t subject to the taxes because they’re viewed as an economic unit in the eyes of the federal government.) While more employers have begun reimbursing their workers for those extra costs, it’s still a relatively small number that do.

But now that same-sex marriage is legal at the state level, employees will no longer owe state income taxes on the value of those benefits, according to a spokeswoman for the state department of taxation.

Do you know of any employers with a self-insured plan that do not cover same-sex spouses? And how much extra do you have to pay for health coverage since same-sex marriage is not recognized by the federal government?

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