In a 5-4 ruling in Obergefell v. Hodges released on June 26, 2015, the Supreme Court held that same-sex marriage is a fundamental right guaranteed by the 14th Amendment of the United States Constitution, expanding the right to gay marriage to the remaining 13 states that had not previously allowed it. The Court’s ruling will eliminate disparities in how same-sex couples are treated with respect to healthcare coverage options and, as such, will have mixed effects on their options in those states where gay marriage is newly legal.
What Are the Implications for Healthcare Coverage?
Impact on Medicaid/CHIP Eligibility. Because of the Supreme Court’s ruling, all states must treat married same-sex couples who are living together as part of the same household. To determine whether an individual is eligible for Medicaid/CHIP, states assess a household’s composition and countable income and then compare that calculation to the state’s eligibility levels which are set, by household size, as a percentage of the Federal Poverty Level.
Treating same-sex couples as spouses can increase the likelihood that they are eligible for Medicaid/CHIP by increasing their household size and, therefore, raising their household income eligibility threshold. Conversely, it can make a household less likely to be eligible by increasing the total family income. Ultimately, in terms of Medicaid/CHIP eligibility, whether a same-sex couple benefits or loses from being treated as one household depends on the amount of income each spouse contributes. Additionally, with respect to eligibility for long-term services and supports (LTSS) financed by Medicaid, same-sex married couples in all states will now be able to have their eligibility evaluated in light of the spousal impoverishment rules. These rules protect a certain amount of household income to accommodate the needs of a spouse who remains at home and is not in need of LTSS.
Prior to the Obergefell decision, states had the discretion to view same-sex married couples residing together as part of the same household. States that had not previously recognized gay marriage may need to update their eligibility systems to treat same-sex married couples residing together as part of the same household.
Impact on Advance Premium Tax Credits and Cost-Sharing Reductions Eligibility for Marketplace Coverage. Married taxpayers must file a joint return to be eligible for Advance Premium Tax Credits (APTCs) and Cost-Sharing Reductions (CSRs) for Marketplace coverage. Therefore, gay married couples who are applying for subsidized Qualified Health Plans (QHPs) must file jointly to have their eligibility assessed.
The level of APTCs/CSRs a household receives is based on calculating the household’s income as a percentage of the Federal Poverty Level for its family size. With same-sex marriage legal across the country, the family size of gay married couples now will include both spouses. As with Medicaid/CHIP eligibility, this can be a benefit or a detriment, making some same-sex couples eligible for more financial assistance, while reducing or eliminating subsidies for others. If one partner’s income is significantly lower than the other partner’s, counting both incomes increases household size and, therefore, can improve eligibility options. In contrast, if both partners have high salaries, combining their incomes may decrease the amount of subsidies they can access—or even put them over the threshold, so they are no longer eligible for assistance.
Impact on Minimum Essential Coverage Assessments. Individuals may not be eligible for APTCs/CSRs if their employers offer affordable minimum essential coverage. In addition, if they do have access to affordable coverage, they are subject to the mandate requiring them to have health insurance. The test to determine whether employer-sponsored health insurance is affordable for a family is based on the cost of self-only coverage for the employee—not whether coverage is affordable for the entire family. As a result, with the Supreme Court’s decision, same-sex married couples who have access to coverage through their spouses may no longer be eligible for APTCs/CSRs—and may face the individual mandate penalty if they are not insured.
Impact on Medicare Coverage. Individuals in same-sex marriages—like those in heterosexual marriages—will be able to qualify for Medicare based on a spouse’s work history.
Impact on Access to Employer-Sponsored Coverage. Same-sex spouses will be entitled to access health insurance through employer-sponsored coverage, if the employer offers dependent coverage. Additionally, employer-sponsored coverage for same-sex spouses will no longer be considered taxable income. Same-sex spouses may also receive COBRA benefits. Finally, employees may also add a same-sex spouse to their health coverage outside of the open enrollment period, if they marry or if the spouse loses coverage due to a job loss or change.
Obergefell v. Hodges will impact same-sex couples’ healthcare coverage in varying degrees depending on their incomes and coverage status. Manatt will continue to monitor developments as states, the federal government, couples, and employers adjust to the new landscape established by the Supreme Court’s ruling.