Health insurance options for same-sex couples
Health insurance for married individuals is complicated enough these days without the pitfalls faced by many same-sex couples nationwide.
Silver Lake residents David Michael Barrett and husband Mark Peters were married in 2008 during the brief period in which same-sex marriage was legal in California. And for almost a decade, they considered themselves fortunate to qualify for work-based insurance coverage provided through Peters’ employer.
But when Peters left his job last month, the couple faced a new round of insurance decisions and questions about eligibility and benefits. “We had to totally rethink our healthcare,” Barrett says.
Every insurance company and every state has different rules, policies, benefits and options. And now a new batch of national standards is unfolding as the Affordable Care Act takes effect.
For gay couples, extra questions abound, with federal and state laws about gay marriage and domestic partnership under review by the U.S. Supreme Court.
Even though same-sex marriage is not currently legal in California, gay couples here enjoy legal rights not available in many other states.
California law requires insurance companies to offer coverage for registered domestic partners. That means coverage must be the same or equivalent to that offered to heterosexual spouses, according to Jennifer Pizer, director of the Law and Policy Project with Lambda Legal, an advocacy organization for lesbian, gay, bisexual and transgender people.
When Peters left his job, the couple faced a choice: Extend their existing policy or search for other options. Sticking with the same policy as a former employee would have cost $1,200-plus a month, Barrett says. “That isn’t really a viable option. It’s ridiculous.”
The couple turned to the private insurance market to shop for a new health plan, which Barrett found easier than he had expected. “They gave me more trouble getting insurance because I have high cholesterol than because we are a same-sex couple,” he says.
The men now pay $363 a month.
For same-sex couples who are in the market for health insurance, here are some options to consider.
Getting insurance at work
The good news, says Helen Darling, president of the National Business Group on Health, is that a growing number of employers nationwide are making health benefits available to same-sex partners. “Almost all employers cover spouses, and now we have same-sex partners who can be married. If they are married, they are covered,” she says.
In addition, about two-thirds of Fortune 500 employers in the country now make health benefits available to the same-sex partners of employees, as long as they are registered as domestic partners.
Employers generally aren’t required by law to offer this type of coverage or to allow a same-sex spouse to continue that coverage through COBRA after the employee leaves the job, but most do anyhow as a way of recruiting top employees. “You want people to feel welcome, and the more benefits you can give them, the more likely they are to want to work for that organization,” Darling says.
Still, same-sex couples often face higher costs. For heterosexual married couples, employer-based health insurance is a tax-free benefit. That’s not the case for same-sex couples.
Barrett and Peters, for example, are legally married in California and file state taxes jointly as a married couple. However, because the U.S. government doesn’t recognize same-sex marriages, they must file federal taxes individually.
That means employers offering same-sex health benefits are required by law to calculate the cost of the benefit and report it as earned income. “Because you are not considered married, that spousal benefit would be considered as compensation,” explains Ninez Ponce, senior researcher at UCLA’s Center for Health Policy Research.
Therefore, both the employee and the employer pay taxes to the federal government on health benefits for same-sex couples.
Buying coverage on your own
“Even in states where gay marriage is illegal, same-sex couples may be able to obtain health insurance together,” says Carrie McLean, senior manager of customer care with online insurance broker eHealthInsurance.
Some states, including California, mandate coverage for same-sex spouses or domestic partners. Other states allow it at insurers’ discretion. In practice, a policy for same-sex couples can be found in almost every state in the country, experts say.
When shopping online for policies for a same-sex couple, both HealthCare.gov and eHealthInsurance include a filter for domestic partner coverage.
According to MacLean, though, even if couples can buy a family plan, it’s not always in their best interest to do so.
Family coverage, she says, is often more expensive than two individual plans.
Buying coverage through new marketplaces
One of the main advantages to buying a health plan through the new state-based insurance markets being created because of the healthcare overhaul law is that most people who do so will qualify for federal subsidies: A family making as much as $94,000 annually will be eligible for a tax credit.
Because the federal tax return is what determines eligibility, taking advantage of the credits is more complicated for same-sex couples who cannot file jointly.
According to Andrew Cray, a policy analyst with the Center for American Progress in Washington, D.C., couples like Barrett and Peters will have to apply individually for tax credits at the federal level, then could combine their credits to buy family coverage through the state’s marketplace. For some same-sex couples, that could lead to bigger savings.
The bottom line, UCLA’s Ponce says: “You’ll never get complete benefits equality unless you have federal marital equality.”
Zamosky writes about healthcare and health insurance.
