In a historic decision, the US Supreme Court has ruled for the first time that individuals have protections under Title VII of the Civil Rights Act against workplace discrimination based on gender identity and sexual orientation. Title VII bans discrimination on the basis of race, color, religion, sex, and national origin in compensation, terms, conditions, or privileges of employment (which includes employer-sponsored healthcare benefits). Although the law has been in place for 55 years, courts have wrestled with defining prohibited sex discrimination. Three cases before the Supreme Court this term dealt with this issue, and the Court’s consolidated ruling clarifies that Title VII’s prohibition on sex discrimination prohibits employers from discriminating based on sexual orientation and gender identify.
What does this ruling mean for employer-sponsored health plans? The cases decided by the Court today don’t address employee benefit plans specifically, but they do create a heightened compliance risk for plans which cover and treat individuals differently based on sexual orientation and/or gender identity. We advise employers to review plan terms, include coverage exclusions, and make any necessary changes as soon as practicable to minimize this risk. In particular, employers that don’t offer coverage to same-sex spouses should reverse course on this decision immediately to avoid legal exposure.
The cost of inclusive benefits for gender affirmation services for transgender individuals
Gender affirmation services for transgender individuals are typically a very small percentage of overall costs. An estimated 13 million Americans age 13 and older identify as lesbian, gay, bisexual or transgender. Approximately 1.4 million adults in the US identify as transgender and not all have surgery; some choose only hormone treatment or only behavioral health care, and some don’t seek any services. National utilization of services related to gender affirmation surgery is estimated to be approximately 0.05 to 0.2 claimants per 1,000 employees per year, and the typical annual cost per claimant may be $15,000 to $75,000, depending on the needed surgeries.
The benefits of a diverse workforce are well documented and many employers are already actively working to build a more inclusive culture in which all are welcome and all can thrive. Along with the heightened calls to address institutional racism and social inequity, the Supreme Court ruling provides an opportunity for employers to reevaluate policies and practices affecting the LGBQT community. In the words of our CEO, Martine Ferland, “Inclusion is a core value at Mercer and Marsh & McLennan. We strongly reject any form of discrimination and are committed to a future where we can all flourish together, everywhere in the world. Effecting change is up to all of us.”