Last month, the United States Supreme Court decided on two cases with particular consequence to health plans: 1) federal subsidies under the Affordable Care Act and 2) the legality of same-sex marriage.
King v. Burwell: Federal subsidies
On June 25, 2015, the Supreme Court ruled that the federal government may continue to provide tax subsidies to those who need help paying for health insurance. The case had revolved around the issue of whether it was illegal for the federal government to provide these subsidies outside of health insurance marketplaces “established by the state.” Thus, if a state did not have its own marketplace, it was argued that federal subsidies could not be given in that state. This would have not only removed federal subsidies from states without their own marketplaces but also would have voided the employer mandate in those states, since penalties under the employer mandate only occur if an employee receives a subsidy from the government. No subsidy, no penalty.
With the Court’s decision in favor of the Affordable Care Act and federal tax subsidies, individuals will continue to be able to receive federal subsidies, which also means the employer mandate remains in effect for applicable large employers.
Obergefell v. Hodges: Same-sex marriage
On June 26, 2015, the Supreme Court ruled that states must issue licenses for same-sex marriages and recognize same-sex marriages when lawfully licensed and performed out-of-state, effectively making same-sex marriages legal throughout the United States. A wrinkle in the ruling does exist for some plans though since it doesn’t necessarily apply to self-funded plans, which are federally regulated under ERISA, not state law. However, considering same-sex marriage is now federally recognized, it would seem likely that discrimination lawsuits will arise against those not covering same-sex spouses when they cover opposite-sex spouses, and with the Supreme Court’s decision, it also seems probable that those lawsuits would prevail.
Thus, while the coverage of same-sex spouses (when opposite-sex spouses are covered) isn’t technically required of self-funded plans, those plans that don’t offer such coverage put themselves at risk of legal repercussions.