NOTE: The Supreme Court's 5-4 decision to invalidate the Defense of Marriage Act (DOMA) will affect more than 1,000 federal statutes—and have far-reaching implications for healthcare reform implementation and health insurance access. The Obama Administration is expected to release a full interpretation of the DOMA decision's impact on federal healthcare statutes in the coming months. To help you prepare, Manatt has created an initial assessment of how the DOMA defeat will affect Insurance Affordability Programs under the Affordable Care Act (ACA). You can read the summary below—and click here to download the complete assessment free.
In a sharply divided ruling on the United States v. Windsor released on June 26, 2013, the Supreme Court invalidated DOMA, clearing the way for federal recognition of same-sex marriages. Within hours of the decision, Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS), announced that her team will begin reviewing all relevant federal statutes to ensure the Court's decision is implemented swiftly and smoothly in the healthcare arena.
In the majority opinion, Justice Kennedy identifies both the practical and symbolic impact of DOMA on individuals in same-sex marriages, citing several health-focused examples. For instance, the Court noted that, because of DOMA, same-sex spouses of government employees could not access healthcare benefits, as heterosexual married couples could. In addition, DOMA raised the cost of healthcare for same-sex couples and their families by taxing employer-provided health benefits as income—a practice not followed for heterosexual couples.
What Are the Implications for Healthcare Reform Eligibility and Implementation?
- Impact on Medicaid/CHIP Eligibility
With the invalidation of DOMA, states that recognize gay marriage must treat married, same-sex couples 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 as a percentage of the federal poverty level.
Treating same-sex couples as spouses can make it more likely that they are eligible for Medicaid/CHIP by increasing the size of their households 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.
- Impact on Advance Premium Tax Credits (APTCs)/Cost-Sharing Reductions (CSRs) Eligibility
Married taxpayers must file a joint return to be eligible for APTCs/CSRs. Therefore, with the demise of DOMA, gay married couples who are applying for subsidized Qualified Health Plans (QHPs) and living in states that recognize same-sex marriages must file jointly to have their eligibility assessed.
The amount 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 DOMA invalidated, 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 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 defeat of DOMA, same-sex couples who have access to coverage through their spouses may not be eligible for APTCs/CSRs—and may face the individual mandate penalty, if they are not insured.
- Impact on Marketplace Information Technology Systems
The IT systems that both state-based and federally-facilitated marketplaces developed to support enrollment were not designed to account for same-sex marriages. For example, the logic built into the system of the federally- facilitated marketplace splits a couple apart to determine eligibility for an Insurance Affordability Program, if both partners are the same gender. States that recognize same-sex marriage must revise their eligibility logic or implement manual processes to accommodate the DOMA defeat.
What Are the Implications for Government Programs and Employer-Sponsored Coverage?
In addition to its impact on the ACA, the DOMA decision will affect the access married, same-sex couples have to many government programs, as well as to employer-sponsored health insurance. With DOMA no longer in place:
- Same-sex spouses of federal employees will be entitled to federal healthcare coverage.
- Same-sex spouses of military personal will be eligible to receive TRICARE 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.
- Employer-sponsored coverage for same-sex spouses will no longer be considered taxable income.
- Same-sex spouses will receive COBRA benefits. In addition, employees may 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.
Over the next several months, federal agencies will be reviewing statutes affected by the DOMA decision and undoubtedly will identify additional healthcare implications. Manatt will continue monitoring any new guidance and providing you with the analyses and advice you need to understand and prepare for the changes.