Health insurance coverage after DOMA: not always an improvement

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Because DOMA denied same-sex couples marital status, they suffered from health insurance disparities that cost an average of $1,069 in taxes every year—and that was within states that recognized their marriage.

Gay couples will now receive the same federal benefits as straight couples. Employees of the federal government, for example, can obtain health insurance for their spouses. By and large, it’s clear that health insurance coverage has improved for same-sex couples.

But that’s not always the case. Lower-income couples, especially, should watch out for a hike in medical expenses.

Negative consequences of the repeal

Lower-income couples may actually be hurt by DOMA’s repeal, at least when it comes to medical care. Now, coverage under the Affordable Care Act will be harder to come by.

The ACA attempts to make healthcare more affordable with tax credits, and, in particular, it helps Americans who earn between 100% and 400% of the federal poverty level. The problem is, to the federal government, income for a married couple and two single people is not made equal; the cutoff for tax credits is significantly lower for those who have tied the knot, at $62,040. For an individual, it’s $45,960. In other words: under DOMA, when the federal government saw them as two individuals, a gay couple qualified for ACA tax credits if, collectively, they earned less than $91,920. Now, their ceiling for coverage is $30,000 lower.

Couples who depend on Medicaid face the same dilemma. Medicaid is available to those earning up to 138% of the poverty level, which is about $15,800 a year for individuals and $21,400 for couples. So, a couple in which each spouse earns $12,000 a year would have previously qualified for Medicaid. This no longer holds true.

Confusion on the state level

Full access to benefits granted by federal law does not guarantee equal opportunities at the state level. In states like Texas, South Carolina and Michigan, which do not recognize same-sex marriage, healthcare benefits will continue to be hit or miss from company to company.

Many companies in more progressive states already offered benefits to gay couples before DOMA’s repeal. The majority of the nation’s Fortune 500 companies currently offer health benefits to domestic partners. We expect even more will do the same soon, given the momentum behind the gay rights movement. Unfortunately, for the time being, employers in most states still have the power to deny gay spouses employer-sponsored coverage.

James Klein, president of the American Benefits Council, may have summed it up best: “Now arguably there’s going to be a third category – there’s going to be the tax treatment that goes to opposite-sex couples, there will be the tax treatment that goes to same-sex couples in states that recognize same-sex marriage…and then you’ll have a third category of domestic partners who are not recognized as spouses.”

Mike Anderson is an analyst for NerdWallet, a financial-literacy company dedicated to helping consumers make better decisions with their wallet.

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