Access to Employer-Sponsored Health Coverage for Same-Sex Spouses: 2020 Update

Background

The legal and policy landscape regarding protections based on sexual orientation and gender identity in health care and other areas has shifted markedly in the last decade. Most recently, on June 15, 2020 in Bostock vs. Clayton County, the Supreme Court of the United States ruled that, under Title VII of the Civil Rights Act of 1964, it is unlawful sex discrimination for an employer (with at least 15 employees) to fire an employee because of their sexual orientation or gender identity. It is likely that this ruling will have implications for employers’ decisions regarding health insurance coverage for employees with same-sex spouses, among other areas of employment.

Using the latest data from our annual Employer Health Benefits Survey (EHBS), we assessed access to employer sponsored health insurance (ESI) coverage for same-sex spouses during the first half of 2020 (prior to the Bostock decision), as well as trends over time; ESI remains the primary way people in the U.S. receive health coverage, either directly or as a spouse or other dependent.^1 ,2  We find that, as of mid-2020, while employer offer of same-sex spousal coverage has increased over time, it remains less common than opposite sex spousal coverage.³  These increases follow two other Supreme Court rulings (United States v Windsor and Obergerfell v Hodges) which guaranteed the right to marriage nationwide and paved the way for wider access to health insurance through the workplace (see Appendix).⁴ 

Findings

Firms Offering

In 2020, about three-quarters (74%) of firms offering health insurance coverage to opposite-sex spouses also provided coverage to same-sex spouses, a substantial increase from 43% in 2016 (see Figure 1).⁵  Of the remaining 26% of firms, 5% reported that they do not offer this benefit (similar to the share in 2018) and 21% reported they had not encountered this as a benefits issue, a finding driven by small employers (those with fewer than 200 workers), who represent the majority of employers overall (97%).⁶  It is becoming less common for employers to report not encountering this benefits issue.

The likelihood of employers offering both opposite-sex spousal coverage and same-sex spousal coverage increases with firm size (see Figure 2). Among firms offering opposite sex spousal coverage, large firms (those with 200 or more employees) were more likely to offer coverage to same-sex spouses compared to smaller firms (89% vs 73%). Almost nine in ten (89%) large firms with opposite-sex spousal coverage offered such coverage, 9% did not, and 2% reported they had not encountered this benefits issue. Among the largest firms (those with a 1,000 or more workers), 95% offered coverage to same-sex couples. By contrast, just 73% of small employers (3-49 workers) offered coverage to same-sex spouses. Four (4%) percent did not and 23% said they had not encountered it.

 

Covered Workers

While the majority of firms in the United States are small, the majority of covered workers are employed by large firms (200 or more workers) (see Figure 3).⁷  In 2020, among employees who worked at firms offering opposite-sex spousal health benefits, 91% also had access to same-sex spousal coverage, up somewhat from 88% in 2018 and 84% in 2016 and 2017 (see Figure 4). Five percent (5%) did not have access to this benefit, and 4% worked at firms who reported they had not encountered this benefits issue.

As with firms offering same-sex spousal coverage, the share of employees with access to this benefit increases with firm size (see Figure 5). Most covered workers (96%) at large firms (those with 200 or more employees) who have access to opposite-sex spousal coverage also have access to same-sex spousal coverage. Just 4% did not, and less than1% worked at firms that reported they had not encountered the issue. Among workers at the largest firms (1,000+ workers), nearly all (98%) had access to same-sex spousal coverage. Those least like to have access were employees at firms with 50-199 workers, 15% of whom did not have same-sex spousal coverage when opposite sex coverage was available.

Workers at small firms offering opposite-sex spousal coverage were less likely to have access to health insurance benefits for same-sex spouses, though a majority did (77%). Nine percent (10%) did not have access to this benefit and another 13% worked at firms that report they have not encountered this issue.

Conclusion

These findings indicate that access to employer coverage for same-sex spouses is increasing in the U.S., though it still is less than access to opposite sex spousal coverage. Coverage varies substantially by employer size, with employees at small firms having less access while those at the largest firms have almost uniform access to this benefit. In some cases, lack of access could be a policy decision, though that appears to be on the decline, with smaller shares of firms saying explicitly that they do not offer same-sex spousal coverage. Moreover, it is likely that the Bostock decision will have further implications for same-sex spousal coverage, with more firms being required to offer this benefit under the sex protections in Title VII. However, Title VII nondiscrimination protections do not apply to the 5% of employees at firms with less than 15 employee. Further, the Bostock court cautioned that employers could potentially secure religious liberty exemptions from extending sex protections to encompass sexual orientation and gender identity and it is yet to be seen how such exemptions interact with Title VII.

This work was supported in part by the Elton John AIDS Foundation. We value our funders. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

Supreme Court Marriage Cases – Background

Prior to the Windsor and Obergefell decisions, same-sex couples faced limited options for obtaining spousal coverage through an employer and when they did, this benefit was treated differently under federal law from benefits received by heterosexually married couples. While some employers offered domestic partner benefits for same-sex partners⁸  and a growing number of states began to recognize same-sex marriage⁹ , in 2012, less than half of all workers with health coverage had access to same-sex health benefits.¹⁰  In addition, because the federal government did not recognize same-sex marriages, where such benefits were offered, they were not considered tax exempt which meant that same-sex couples faced higher tax burdens compared to heterosexual counterparts.

In June 2013, in Windsor, the Supreme Court overturned a major portion of the Defense of Marriage Act (DOMA) which had, for federal purposes, defined marriage as between a man and a woman. The Windsor decision required federal recognition of same-sex marriages, even if a couple lived in a state that did not recognize same-sex marriage. As a result, employer-sponsored health benefits provided to legally married same-sex couples were now considered tax exempt.¹¹  Windsor, however, did not require states to issue same-sex marriage licenses or recognize those performed elsewhere, leading to a patchwork of recognition across the U.S. and lack of access to legal same-sex marriage for many couples where they lived. In 2015, the Supreme Court’s ruling in Obergefell legalized same-sex marriage nationwide, requiring all states to recognize same-sex marriages and issue marriage licenses to same-sex couples. While neither decision required private employers to offer same-sex spousal coverage if they offered coverage to opposite-sex spouses¹² , it was expected that wider access to marriage would lead to greater access to coverage. In fact, one study found that the legalization of same-sex marriage in New York was associated with an increase in employer-sponsored insurance among same-sex couples.¹³  In addition, an increasing number of states (22 states and DC as of 2019) have protections in place that prohibit employers from discriminating against individuals based on sexual orientation, and presumably would require employers offering opposite-sex spousal coverage to extend that benefit to same-sex spouses.¹⁴  Furthermore, employers who refuse to offer same-sex spousal coverage while providing coverage to opposite-sex spouses could face legal challenges. Still, employers are not required to provide same-sex spousal coverage parity to their employees.

1. Virtually all employers offering health benefits offer spousal coverage, allowing over half those covered by an employer plan to be covered as a dependent. ↩︎
2. Kaiser Family Foundation. Health Insurance Coverage of the Total Population, 2019. State Health Facts. https://modern.kff.org/other/state-indicator/total-population/ ↩︎
3. Note: the survey was largely fielded prior to the Bostock decision, see Methods. ↩︎
4. Additional detail about these Supreme Court cases is available in the Appendix. ↩︎
5. This increase was driven by the smallest firms so this finding may have some year-to-year volatility based on the mix of small firms sampled. ↩︎
6. Distribution of Employers, Workers, and Workers Covered by Health Benefits, by firm size, 2020 from The KFF 2020 Employer Health Benefits Survey (2020). Exhibit available here: https://modern.kff.org/report-section/ehbs-2020-survey-design-and-methods/#figurem6 ↩︎
7. Distribution of Employers, Workers, and Workers Covered by Health Benefits, by firm size, 2020 from KFF 2020 Employer Health Benefits Survey (2020). Exhibit available here: https://modern.kff.org/report-section/ehbs-2020-survey-design-and-methods/#figurem6 ↩︎
8. The first employer to do so was the Village Voice in 1982. (Appleby, J. May 14, 2012. “Many Businesses Offer Health Benefits To Same-Sex Couples Ahead Of Laws.” PBS Newshour. Retrieved from: http://www.pbs.org/newshour/rundown/many-businesses-offer-health-benefits-to-same-sex-couples-ahead-of-laws/.) ↩︎
9. Massachusetts became the first state to recognize same-sex marriage in 2003. By June 2013, 12 states and the District of Columbia recognized gay marriage. (See Honan, E. June 26, 2013. “Factbox: List of states that legalized gay marriage.” Reuters. Retrieved from: http://www.reuters.com/article/us-usa-court-gaymarriage-states-idUSBRE95P07A20130626.) ↩︎
10. Among Large Firms Offering Health Benefits, Percentage That Offer to Unmarried Opposite-Sex and Same-Sex Domestic Partners, 2008-2019, from The KFF 2019 Employer Health Benefits Survey (2019). Exhibit available here: https://modern.kff.org/report-section/ehbs-2019-section-2-health-benefits-offer-rates/#figure213 ↩︎
11. IRS Revenue Ruling 2013-17,  August 29, 2013. https://www.irs.gov/pub/irs-drop/rr-13-17.pdf. ↩︎
12. However, the Windsor decision ensures federal employees and contractor employees, have access to same-sex spousal coverage at parity with opposite-sex spousal coverage offerings and the Obergefell ruling means that spousal coverage benefits should be extended to state and municipal employees across the nation to the same degree as their heterosexual counterparts. ↩︎
13. Gonzales G. “Association of the New York State Marriage Equality Act with Changes in Health Insurance Coverage.” JAMA. 314(7). 2015. ↩︎
14. Human Rights Campaign. Map of State Laws and Policies- Statewide Employment Laws and Policies. Available at: http://www.hrc.org/state_maps. Accessed 10/15/20. ↩︎