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Can Self-Insured Health Plans Still Exclude Same-Sex Spouses?



QUESTION: Our company is implementing a new self-insured group health plan for employees, spouses, and dependent children. The draft plan document excludes same-sex spouses from the definition of spouse. Is this type of exclusion still permitted?

ANSWER: The Equal Employment Opportunity Commission (EEOC) says no, and a recent U.S. Supreme Court decision strongly supports that answer. The EEOC’s position dates back to the 2015 nationwide legalization of same-sex marriage and is based on Title VII, the federal law prohibiting employment discrimination. (State nondiscrimination laws are generally inapplicable to self-insured plans because of ERISA preemption.) Title VII prohibits most employers with 15 or more employees from discriminating in compensation or the terms, conditions, or privileges of employment because of an individual’s race, color, religion, sex, or national origin. (Other laws prohibit employment discrimination based on age, disability, and genetic information.) The EEOC has stated that benefits under employer-sponsored group health plans must be provided without regard to the prohibited factors. Historically, Title VII was not interpreted to protect individuals from discrimination based on their sexual orientation, but more recently, courts and the EEOC have interpreted Title VII as applying to claims of sexual orientation discrimination as a type of sex discrimination.

In June 2020, the U.S. Supreme Court ruled that employers violate Title VII’s prohibition of discrimination based on sex when they fire employees merely for being gay or transgender (see our Checkpoint article). The decision does not directly address other employment policies (such as the provision of employee benefits), and its scope will be tested in further litigation. But at least one court has already held that the refusal to enroll same-sex spouses in a group health plan that otherwise offers spousal coverage constitutes unlawful sex discrimination in light of the Supreme Court’s decision (see our Checkpoint article). And EEOC guidance providing examples of unlawful sex discrimination specifically includes denying spousal health benefits to a female employee whose spouse is a woman, while providing spousal health benefits to a male employee whose spouse is a woman. Given the EEOC’s steadfast position, along with the potential applicability of the Supreme Court decision, your company may wish to lower its potential exposure by revising the draft plan’s definition of spouse to include all spouses before the document is adopted.

For more information, see EBIA’s Employee Benefits for Domestic Partners at Section IV.G (“Impact of Title VII on Plan Design”) and EBIA’s Group Health Plan Mandates manual at Sections XXI.C (“EEOC’s Position on Title VII and Health Coverage”) and XXI.D (“Court Decisions Applying Title VII to Health Coverage”). See also EBIA’s Cafeteria Plans manual at Section XI.B (“Who Is a Spouse for Purposes of Obtaining Tax-Free Health Coverage?”), EBIA’s ERISA Compliance manual at Section IX.J (“Spouse and Dependent Child Eligibility”), and EBIA’s Self-Insured Health Plans manual at Section XIV.E (“Beneficiary Eligibility”).

Contributing Editors: EBIA Staff.

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