How the Supreme Court marriage decision affects the insurance industry

Friday’s ruling granting marriage rights to all Americans has implications for players in employee benefits and liability markets.

Insurance News


The Supreme Court’s decision Friday to allow same-sex marriage nationwide will have some – though not much – impact on the insurance industry, experts are saying.

In a close 5-4 vote, the court ruled that states refusing to allow same-sex couples to wed are violating the Fourteenth Amendment to the US Constitution. As such, financial and health insurance considerations for same-sex couples have shifted, though commercial entities discriminating against such couples may not face heightened liability.

Employer-provided health insurance plans may see the smallest changes thanks to Friday’s ruling, according to industry representatives.

“It’s possible that some employers, particularly those with employees in the handful of states that to this point haven’t permitted same-sex marriage, might see a slight increase in enrollment of same-sex spouses where the employers’ health plans cover all ‘lawfully wed’ spouses,” said independent insurance brokerage Lockton.

This impact may not be seen for employers that are self-insured, such as a church or local government. Federal law does not compel a church or other private employer to offer health insurance coverage to same-sex couples, and a church may claim protection from state and local nondiscrimination rules under religious freedom.

As for local governments, most have led the charge for coverage for same-sex spouses and domestic partners.

“We leave that issue for another day,” Lockton said.

For insurance brokers working with employers, consulting firm Aon Hewitt says the main issue will be the administrative burden of including new spousal coverage on existing plans or adjusting the cost-sharing of spousal coverage if an employer is expecting to cover a significantly higher number of spouses and partners.

“Some employers may move toward offering spousal benefits under one common umbrella. Others will continue to offer benefits coverage to both same-sex and opposite-sex domestic partnerships, while also recognizing the broader definition of marriage endorsed by the Supreme Court,” said J.D. Prio, senior vice president and national practice leader for Aon Hewitt’s Health Law Group.

“As companies decide on a strategy, they will also want to consider the impact of state and local laws requiring employers to offer domestic partner benefits.”

While the Supreme Court’s decision is certainly monumental, however, it is important to recognize its limitations. Legal scholars say that while the ruling gives same-sex couples the right to marry, it does not protect them from discrimination in employment or housing issues.

That almost certainly means heightened litigation for companies who engage in such discrimination – particularly those advancing religious freedom arguments.

Already, faith-based objections have been challenged in court; in Washington state, a florist was sued for refusing to sell flowers for a gay wedding and in New Mexico, a judge ruled against a photographer who cited religious reasons for not photographing a same-sex couple.

Such litigation can be expensive and even detrimental for businesses challenged in court, and brokers working with clients that frequently cite religious freedom arguments may consider increasing limits on liability policies.

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