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Group Health Plan Eligibility: Must Plans Include Same-Sex Spouse Coverage?

As a result of the U.S. Supreme Court’s ruling in Obergefell v. Hodges, all states must allow same-sex couples to marry and must recognize same-sex marriages lawfully performed in other jurisdictions.

The ruling itself, however, does not affect plan eligibility requirements for group health plans.  Fully insured plans generally have less discretion in defining eligibility and adopt the eligibility guidelines set forth by the insurer in its certificate of coverage.  It is important for plan sponsors to review the certificate of coverage to determine how the term “spouse” is defined.  If a certificate of coverage leaves the definition of spouse to the discretion of the plan sponsor, it is critically important for the plan sponsor to define the term in its plan document, including the summary plan description.

Self-insured ERISA plans generally remain free to define, by their terms, whether same-sex spouses are eligible for benefits provided to spouses.  However, due to the decision in Obergefell v. Hodges, participants and courts will interpret plan references to spouses to include same-sex spouses, if not expressly excluded.  To avoid ambiguity, issues in plan administration, and possible litigation, plan sponsors should clearly define spousal eligibility in plan documents.  A plan sponsor that is either considering or is currently excluding same-sex spouses from group health and welfare plan coverage should take into account the potential legal implications of doing so, as discussed herein.


Dissension Amongst Federal Agencies and Courts

Title VII of the Civil Rights Act is the most relevant federal law applicable to the exclusion of same-sex spouses from group health plan coverage.  Title VII of the Civil Rights Act of 1964 prohibits covered employers, including the federal government, from employment discrimination based on various traits, including sex.  The law does not expressly list sexual orientation or gender identity as one of those traits.

However, according to the U.S. Equal Employment Opportunity Commission (“EEOC”), the agency responsible for enforcement of federal laws protecting against discrimination in employment, lesbian, gay, bisexual, and transgender (“LGBT”) individuals may bring valid sex discrimination in employment claims under Title VII.

Notably, the EEOC took the position that Title VII’s prohibition on sex discrimination prohibits employers from discriminating on the basis of sexual orientation or gender identity.  Thus, health and other welfare plans that provide benefits to different-sex spouses or domestic partners of an employee must also provide the same benefits to same-sex spouses or domestic partners of an employee.  This position was outlined in the EEOC’s Management Directive:  Processing Complaints of Discrimination by LGBT Federal Employees in which EEOC staff were directed to process sexual-orientation claims as sex-discrimination claims.

The EEOC’s position was not uniformly adopted among other federal agencies or courts, which created a lot of uncertainty as to how Title VII should be interpreted.  Whether or not excluding same-sex spouses from group health and welfare plan coverage is considered employment discrimination on the basis of sex, varied among states within the jurisdictions of the various U.S. Circuit Courts.

The Fifth Circuit Court of Appeals[1] rejected a transgender employee’s discrimination claim in Wittmer v. Phillips 66 Co.  The Court reaffirmed and extended its 1979 decision in Blum v. Gulf Oil Corp., stating that Title VII does not prohibit discrimination based on sexual orientation or gender identity.

Whereas, the Sixth Circuit[2] held in EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., that discrimination based on gender identity is sex discrimination under Title VII.  The Second Circuit[3] in Zarda v. Altitude Express Inc., and Seventh Circuit[4] in Hively v. Ivy Tech Community College of Indiana, recognized sexual orientation as discrimination based on sex.

Appeals courts have remained divided as to the interpretation of sex discrimination in employment under Title VII and a final decision by the Supreme Court of the United States was strongly needed.


Supreme Court Intervention 

Interestingly, the U.S. Department of Justice filed a brief with the Supreme Court asking the justices to consider reviewing the Sixth Circuit opinion in which the EEOC prevailed, but only if the Court also grants review of the decisions in the Second and Seventh Circuit Court decisions.  Shockingly, the Justice Department’s brief states that the EEOC would like “to be sure, the United States disagrees with the court of appeals’ decision.”

The EEOC argued for the Circuit Courts to decide that Title VII protects employees from discrimination based on sexual orientation while the Justice Department’s position was that the Supreme Court should rule that the EEOC’s interpretation of Title VII is wrong.  This was quite an unprecedented dispute between federal agencies governed by the same administration.

On April 22, 2019, the United States Supreme Court granted petitions for certiorari regarding the cases from the Eleventh, Second, and Sixth Circuit Courts and completed a full review of the cases to determine whether Title VII’s prohibition of sex discrimination applies to discrimination based on sexual orientation or gender identity.

[1]   Appellate jurisdiction over the District Courts in Louisiana, Mississippi, and Texas.

[2]   Appellate jurisdiction over the District Courts in Kentucky, Michigan, Ohio, and Tennessee.

[3]   Appellate jurisdiction over the District Courts in Connecticut, New York, and Vermont.

[4]   Appellate jurisdiction over the District Courts in Illinois, Indiana, and Wisconsin.


On October 8, 2019, the Supreme Court heard oral arguments regarding LGBT protections under Title VII in Bostock v. Clayton County, Georgia.  All three cases being reviewed under this decision involved situations where an employer allegedly fired a long-time employee for being homosexual or transgender.

Under Title VII, Congress adopted broad language making it illegal for an employer to rely on an employee’s sex when deciding to fire that employee.  Use of this broad language has led to the necessary consequence recognized today.  On June 15, 2020, the Supreme Court ruled that the Title VII prohibition against employment discrimination on the basis of sex, encompass discrimination based on an individual’s sexual orientation.  Said another way, an employer who fires an individual merely for being gay or transgender violates federal law.  This decision overrules the Eleventh Circuit case and affirms the Second and Sixth Circuit cases.


Next Steps

Now that the Supreme Court has ruled on the parameters of Title VII, employers should include same-sex spouses in the definition of “spouse” for purposes of group health and welfare plans, to avoid potential litigation.  Employers should also carefully review plan documents to see how transgender benefits are handled.  Additionally, various state and local laws may extend protections to LGBT employees beyond federal law.

The content herein is provided for educational and informational purposes only and does not contain legal advice.  Please contact our office if you have any questions regarding eligibility language for your employee benefit plans.