Gay Couples to Enjoy New Perks (and Penalties) Under Obamacare

The Supreme Court’s ruling means same-sex couples get all the good—and bad—of legal nuptials.

Same-sex marriage supporters rejoice outside the Supreme Court, June 26, 2015.
Alex Wong/Getty Images
June 26, 2015, 9:36 a.m.

The Su­preme Court’s rul­ing Fri­day to leg­al­ize same-sex mar­riage na­tion­wide means that gay couples who marry will en­joy all the leg­al be­ne­fits of mar­riage: hos­pit­al vis­it­a­tion rights, CO­BRA health in­sur­ance, and oth­ers.

But mixed in with the perks, gay and les­bi­an new­ly­weds will find some new­found an­noy­ances that come with a fully leg­al and equal right to marry. Among them: Obama­care’s so-called mar­riage pen­alty.

The es­sence of the un­of­fi­cial pen­alty, as de­scribed by The At­lantic in 2013, is that in­di­vidu­als who could qual­i­fy on their own for the Af­ford­able Care Act’s tax cred­its or cost-shar­ing sub­sidies could lose ac­cess to those be­ne­fits if they get mar­ried and the uni­on pushes their joint house­hold in­come above the threshold to qual­i­fy for as­sist­ance. The num­ber of people af­fected is likely re­l­at­ively small—their in­come would need to be hov­er­ing around 400 per­cent of the fed­er­al poverty level for the tax cred­its and 250 per­cent for the cost-shar­ing sub­sidies—but for those af­fected, it is a real con­cern.

The is­sue is already fa­mil­i­ar to same-sex couples who mar­ried after the Su­preme Court’s 2013 de­cision to in­val­id­ate much of the fed­er­al De­fense of Mar­riage Act. The In­tern­al Rev­en­ue Ser­vice said after the rul­ing that leg­ally mar­ried same-sex couples would qual­i­fy for the fed­er­al health in­sur­ance aid no mat­ter where they lived. Tim Jost, a Wash­ing­ton and Lee Uni­versity law pro­fess­or, wrote in Health Af­fairs that while fed­er­al re­cog­ni­tion would bring cer­tain ad­vant­ages to those couples, “it will not gen­er­ally bring be­ne­fits un­der the Af­ford­able Care Act.”

In fact, Jost wrote, while there are a few scen­ari­os in which couples would be­ne­fit, there were mul­tiple oth­ers in which they could face a net loss in as­sist­ance by com­bin­ing their in­comes for the law’s pur­poses. “[I]n al­most any oth­er scen­ario where both have in­comes be­low 400 per­cent of poverty or one is be­low 400 per­cent and the oth­er earns much more than 400 per­cent, as a couple they come out with less as­sist­ance,” he said.

But these are de­cisions that mar­ried gay couples will now have the chance to make.

“Now, of course, the right to marry doesn’t mean that people have to marry,” said Larry Levitt, vice pres­id­ent of the Kais­er Fam­ily Found­a­tion, in an email. The Court’s rul­ing “just presents same sex couples the same choices with re­gard to health in­sur­ance as every­one else already had.”

There is also the so-called fam­ily glitch, which means that people who would oth­er­wise be eli­gible for ACA as­sist­ance aren’t be­cause they could get in­sur­ance through their spouse—even if their spouse’s in­sur­ance is ex­pens­ive.

“That is, if you’re mar­ried and you get an of­fer of health in­sur­ance as a spouse but it’s very ex­pens­ive, you might get caught in the fam­ily glitch,” Levitt said. “If you wer­en’t mar­ried, you could be eli­gible for ex­change sub­sidies.”

But in light of the Su­preme Court’s de­cision to leg­al­ize same-sex nup­tials na­tion­wide, couples could ac­tu­ally see a pos­it­ive in­verse of the mar­riage pen­alty, said Kel­lan Baker, who stud­ies LGBT health policy for the lib­er­al Cen­ter for Amer­ic­an Pro­gress.

Be­fore the rul­ing, leg­ally mar­ried gay couples qual­i­fied for the tax sub­sidies to buy private in­sur­ance no mat­ter where they lived, so long as their in­come was between 100 and 400 per­cent of the poverty line. But if their in­come slipped be­low the poverty line, they be­came in­eligible for the sub­sidies.

They would in­stead qual­i­fy for Medi­caid if their state ex­pan­ded the pro­gram un­der the ACA—but if the state didn’t re­cog­nize same-sex mar­riage, they would be treated as “leg­al strangers,” Baker said, even if they still qual­i­fied for the pro­gram as in­di­vidu­als.

While noth­ing is 100 per­cent cer­tain with the Court’s rul­ing so fresh, Baker and oth­ers ex­pect that the de­cision should rem­edy that is­sue—one more of dig­nity than fin­an­cial be­ne­fits—for same-sex mar­ried couples and they should be able to move seam­lessly as couples between the in­sur­ance mar­ket­places and Medi­caid.

“The abil­ity of state Medi­caid pro­grams to say no to mar­riage equal­ity was pre­dic­ated on the very same is­sues that brought the case to the Court in the first place,” Baker said.

And more broadly, gay couples liv­ing in states that pre­vi­ously wouldn’t al­low them to marry will see be­ne­fits that oth­er mar­ried couples have long taken for gran­ted, such as the abil­ity to get on the same health in­sur­ance plan as their spouse and the right to vis­it a sick spouse in the hos­pit­al. Even with­in the nar­row scope of health care, big changes are com­ing.

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