Department of Health and Human Services (HHS) Guidance Clarifies that Insurance Companies Must Make Available Health Insurance Coverage for Same-Sex Spouses
On March 14, 2014, the Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) released guidance clarifying the final regulations implementing Section 2702 of the Public Health Service Act (PHSA). PHSA Section 2702 addresses guaranteed availability of coverage. Pursuant to that section, health insurance issuers offering non-grandfathered health insurance coverage in the group or individual market, including coverage under a state or federal Marketplace Exchange, must accept every employer and individual in the state that applies for the coverage, subject to limited exceptions. PHSA Section 2702 and the related regulations prohibit discriminatory marketing practices, including discrimination based on sexual orientation.
The new CMS guidance clarifies that health insurance issuers offering non-grandfathered group or individual health insurance coverage must offer coverage on the same terms and conditions to same-sex spouses that is offered to opposite-sex spouses. Prior to this guidance, this requirement to extend coverage to same-sex spouses already applied in states that perform and recognize same-sex marriage. The new CMS guidance clarifies, however, that all insurance companies in all states are required to make such coverage available.
Importantly, the CMS guidance does not require private sector employers to offer coverage to same-sex spouses. Instead, the guidance requires an insurance company offering non-grandfathered health insurance coverage to offer private employers the option to cover same-sex spouses.
Employers will continue to have discretion—subject to other non-discrimination laws—regarding whether or not to offer coverage to same-sex spouses. For example, employers with self-insured plans are not subject to the new CMS guidance. Likewise, employers sponsoring fully-insured plans that are funded by insurance contracts issued in states that do not currently recognize same-sex marriage also are not necessarily required to offer coverage to same-sex spouses; they must simply be offered the opportunity by the insurance company.
Thus, while the CMS guidance ensures that health insurance coverage will always be available to employers that wish to offer coverage to same-sex spouses, it does not ensure that all same-sex spouses will receive coverage under employer plans. The CMS guidance clarifies that while health insurance issuers are encouraged to offer coverage to same-sex spouses in 2014, all issuers must fully comply for plan or policy years beginning on or after January 1, 2015.
Next Steps for Employers
Employers with insured group health plans should review their policies to determine whether existing spousal coverage is required to be extended to same-sex spouses. Plans insured under a contract issued in a state where same-sex marriage is legal already must extend existing spousal coverage to same-sex spouses. Employers with insured plans issued in states where same-sex marriage is not legal must have the option of extending coverage to same-sex spouses beginning on or after January 1, 2015.
Employers offering either insurer or self-insured plans may also wish to consider whether other nondiscrimination laws implicate the decision whether to offer same-sex coverage.