Historic ruling confirms LGBTQ+ work protections

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.

Employer considerations

• Benefit eligibility for same-sex spouses. Although the Court recognized same-sex marriage in 2015, it didn’t directly address private-sector employment practices, and employers with self-funded group health plans could still offer coverage to opposite-sex spouses and not same-sex spouses. Many state nondiscrimination laws already require equal coverage in insured group health plans, and the Court’s new ruling makes it much more difficult for ERISA plans to exclude same-sex couples from coverage. Employer plans that still include such an exclusion should move quickly to mitigate risk.
• Medical plan design. The Court’s ruling does not provide a coverage mandate for employer-sponsored health plans, thus there is no effective date for plan changes. Nevertheless, group health plan blanket exclusions of transgender-related services, including treatment for gender dysphoria and gender affirmation surgeries, should be reviewed for compliance risk. For example, denial of gender-affirmation services deemed medically necessary for an individual diagnosed with gender dysphoria, where the same services would be covered if deemed medically necessary for a different condition, would raise Title VII risks. Certain limits on treatment for gender dysphoria could violate the Mental Health Parity and Addiction Equity Act if they are not on par with limits on medical/surgical benefits. Employers should also review their health plan’s provider network for adequate access to LGBTQ-supportive and knowledgeable providers, and consider whether family planning coverages (and benefits offered outside the medical plan as well) support the needs of LGBTQ+ employees.
• Disability plan. Employers should confirm that disability plans cover disability periods due to gender affirmation surgeries, whether or not the surgeries are covered by the group health plan. 
• Non-discrimination policy. It’s a good idea to update policies to specifically state that discrimination on the basis of sexual orientation and gender identity is prohibited. 

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.”