Wedding bells will ring later this year if the Supreme Court decides that gay couples are constitutionally entitled to marry. But health insurance, more than romance, may nudge some couples down the aisle.
Amid a push that has made same-sex marriage legal in 37 states and the District of Columbia, some employers are telling gay workers they must wed in order to maintain health-care coverage for their partners. About a third of public- and private-sector employees in the U.S. have access to benefits for unmarried gay partners, according to a federal tally, but employment lawyers say the fast-changing legal outlook is spurring some employers to rethink that coverage.
“If the Supreme Court rules that suddenly there is marriage equality in 50 states, the landscape totally changes,” says Todd Solomon, a law partner in the employee-benefits practice group at McDermott Will & Emery in Chicago, who has been tracking domestic partnership benefits for nearly two decades.
Such a decision will likely result in more employers dropping same-sex partner benefits in favor of spousal benefits, according to Mr. Solomon.
Over the past decade, a growing share of companies has offered coverage for gay employees and their partners as a way to provide equal benefits for couples who couldn’t legally wed. Others companies offer coverage more broadly to unmarried domestic partners, regardless of sexual orientation.
Now, some employers who offer benefits targeting same-sex partners say it is only fair to require those couples to marry where legal, just as their straight co-workers must do to extend coverage.
That is causing some consternation among gay and lesbian employees and their advocates, who say they could be vulnerable to discrimination. Because marriage certificates are public, the documents may end up “outing” an employee, says Selisse Berry, chief executive of Out and Equal, a workplace advocacy group for gay and lesbian employees. The majority of U.S. states lack antidiscrimination protection for gay and lesbian employees, so workers can be fired for their sexuality, advocates say.
“No employee wants to have a benefit taken away, even if it is driven by this other sort of success,” says Jen Cornell, an employment attorney for Nilan Johnson Lewis in Minneapolis.
Benefits concerns prompted the wedding of Mary Pat Byrn and her longtime partner, Kathy Byrn. Mary Pat, a law professor at William Mitchell College of Law in St. Paul, Minn., was covered as a domestic partner on Kathy’s University of Minnesota insurance plan when the state legalized same-sex marriage in 2013. Both women’s employers warned that they would end coverage for domestic partnerships, and gave couples 16 months to marry in order to retain coverage.
“This approach seemed reasonable and fair to me,” says Mary Pat Byrn. The women wed at a local courthouse in October 2014, with their two children in attendance.
Delta Air Lines Inc. DAL +2.67% recently began phasing out same-sex domestic partner health benefits for employees in states where same-sex marriage is legal, says Joanne Smith, the company’s chief human-resources officer.
The company also said that as it phases out the benefit, and in states where same-sex marriage is illegal—including its home state of Georgia— it will cover the extra income taxes paid by employees whose domestic partners receive health benefits. Both decisions are intended to even out the benefits and tax treatment for gay and straight couples, says Ms. Smith.
Mathew Palmer, a Delta flight attendant in New York and a member of the Delta Employee Equality Network, which advocates for gay and lesbian employees, says he supports his employer’s stance on partner benefits.
“Does it encourage employees to get married? It does, but I don’t think it should be looked at as an ultimatum,” says Mr. Palmer, who is currently single. “Marriage is something we as gays and lesbians have fought for, for years, and Delta is acting as our ring bearer.”
Verizon Communications Inc. VZ -0.36% will also stop covering domestic partners in states with legal same-sex marriage, giving employees at least six months to marry. In a letter sent to employees last summer, the company “let them know that they would have to eventually get married to continue those benefits,” says Verizon spokesman Ray McConville. Excellus BlueCross BlueShield, in Rochester, N.Y., took similar action with its workforce when New York state legalized gay marriage in 2011, and some state and local governments have done the same after legalization in their jurisdictions.
“The main idea is to make things fair for everyone,” says Mr. McConville of Verizon. “Currently, if you’re a guy living with a longtime girlfriend or vice versa, you don’t have the ability to get health insurance for your partner.”
Absent a ruling from the Supreme Court, employers who object to same-sex marriage on religious grounds may deny spousal benefits to gay partners, depending on state law and depending on whether the employer chooses to self-insure or contract with an insurance company, though they run the risk of discrimination lawsuits, says Mr. Solomon, the employee-benefits lawyer.
Fear of lawsuits might also push firms to drop same-sex partner benefits. Companies operating in states with gay marriage could be accused of reverse discrimination by straight employees for offering coverage to unmarried same-sex partners, and not unmarried heterosexual couples, says Ms. Cornell, the Minneapolis employment lawyer.
The changes to partner policies come as employers scrutinize spousal benefits overall. In the past three years, a growing number of companies such as United Parcel Service Inc. UPS -0.56% have dropped spousal coverage or imposed surcharges on spouses who can obtain health insurance elsewhere. Other employers are considering similar moves, says Wade Symons, who leads the regulatory resource group at consulting firm Mercer.
“Dependent costs are high, so employers are trying to find ways to offset some of those costs,” says Mr. Symons. A Mercer survey of over 1,100 large employers found that 17% either excluded spouses with other coverage available or imposed a surcharge in 2014, compared with 12% in 2012.
Some 35% of state, municipal and private-sector employees have access to employer-provided health benefits for same-sex unmarried partners and 30% had access to benefits for opposite-sex unwed partners, according to 2014 Bureau of Labor Statistics data. The benefit is more prevalent among larger employers, according to several surveys tracking benefits.
Recognizing that some employees, gay or straight, simply prefer not to marry, a number of employers are taking marriage out of the equation for benefits. Large companies, such as Google Inc. GOOGL -1.24% and International Business Machines Corp. are offering partner benefits to all unmarried couples, gay or straight, as a way to recruit a more diverse pool of employees who may have little interest in getting married, says Deena Fidas, head of the Workplace Equality Program at the Human Rights Campaign, a gay and lesbian advocacy group.
Dow Chemical Co. DOW -1.83% has offered domestic partnership benefits to both gay and straight employees for about a decade, and the firm doesn't plan to change that, even if the Supreme Court rules in favor of gay marriage, because employees and job applicants are attracted to the benefit, says Johanna Söderström, Dow’s corporate vice president of Human Resources and Corporate Aviation.
“Otherwise we would miss out on a huge talent pool,” she says.
(Published by The Wall Street Journal – May 12, 2015)