Insights

Can self-funded plan sponsors, including religious organizations, choose not to cover same-sex spouses on their group health plan?


After the US Supreme Court decision in Obergefell v. Hodges, all states recognize same-sex marriages, and state insurance laws require that they be recognized by fully-insured health plans. While some make the argument that self-funded plans would not be subject to that requirement (since they aren’t subject to state insurance laws due to ERISA preemption), we are of the opinion that any self-funded employer seeking to limit coverage to opposite-sex spouses should seek counsel.

Since the Obergefell case did not speak to the application of the case to benefits, some are of the opinion that a self-funded plan that wishes to exclude coverage for same-sex spouses may do so. Keep in mind, though, that a self-funded plan that provides coverage to opposite-sex spouses, but excludes coverage for same-sex spouses risks litigation under Title VII of the Civil Rights Act of 1964. Specifically, some courts and the EEOC have contended that excluding coverage for same-sex spouses would be discrimination based on sexual orientation.

In one example of a case that was settled through the EEOC, the EEOC linked a press release that can be found here on the EEOC Newsroom page. The press release discusses a group health plan that specifically excluded coverage for same-sex spouses. One of the participants filed a complaint and the EEOC brought suit against the employer for Title VII discrimination. As part of the settlement, the employer had to reimburse health care expenses for the same-sex spouse and revise its policy.

Even religious organizations and religiously-affiliated institutions should consult with counsel before excluding same-sex spouses from coverage. While the EEOC does recognize a sort of “ministerial exception” available to churches under some laws, the exception doesn’t tend to allow churches the right to discriminate for every purpose. Instead, whether or not a religious institution could claim an exception under Title VII or any other federal law would likely involve a facts and circumstances-based determination. Additionally, there is always the risk of litigation of the matter.

So ultimately, while it seems that a self-funded plan sponsor could choose not to cover same-sex spouses, doing so would likely open the employer up to the risk of litigation. And courts and the EEOC have made it clear that they find a same-sex spouse exclusion to be discrimination. As such, an employer who wants to keep such an exclusion should work with their outside counsel (even if the client has a religious basis for excluding such coverage), and that counsel would be best suited to draft any documentation of the exclusion (if they move forward with one).