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Employers See Obstacles, Opportunities with Employee Spouses, ChildrenMarch 29, 2010 Extending health benefits to an employee's spouse and children can boost the value of an employer's benefits package. However, recent changes in same-sex marriage laws are forcing employers to rethink how they distribute those benefits -- and prompting some to cut them altogether. The law firm of von Briesen & Roper notes that more employers are extending benefits to those who do not qualify as dependents under the federal tax code either by choice or because local governments have mandated it. Even though the federal tax code does not define same-sex partners as legal "spouses," a number of states and local governments have enacted laws that recognize same-sex unions. In March, the District of Columbia became the latest government body to legalize same-sex marriages. While these new rules can open access to benefits for same-sex couples and dependents, the laws contains a slew of limitations, von Briesen & Roper advise. For instance, regardless of state and local law, "an employee cannot pay his/her portion of the premiums for the coverage of a nontax dependent pretax through a cafeteria plan [Section 125]," the law firm wrote in a recent news release. Also, health reimbursement accounts and flexible spending accounts are off limits because these arrangements can only cover "expenses incurred by spouses and tax dependents," the firm wrote. In addition to the compliance challenges, ethics and philosophy -- and religion -- come into play for some employers. Rather than being forced to extend benefits to same-sex spouses, the Catholic Charities of the Archdiocese of Washington announced it would not cover spouses in any new benefits enrollment after the District of Columbia legalized same-sex marriages. The change does not affect those currently enrolled and does not extend to dependent children. Despite the compliance headaches, some employers see dependent coverage as a way to cut costs in the long run. For example, companies such as PepsiCo, Mars and Owens Corning are experimenting with a new pilot program that pays for more doctor visits for families with obese children. The initiative, sponsored by a number of health insurers and the Alliance for a Healthier Generation, aims to make obesity treatment more accessible and to improve kids' health early on. "What we have to do is change the mindset [from] 'What is this going to cost the system' to one that says, 'Look how much we're going to save the health care system by treating obesity in these kids,'" said Dr. Louis Aronne, a director at New York Presbyterian Weill Cornell Medical Center. |
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