The Supreme Court’s ruling that the Defense of Marriage Act is unconstitutional will not only make a big difference in health benefits for some federal employees, it could also affect people who will be newly eligible for Obamacare beginning next year.
For lower-income people seeking coverage under Obamacare, marriage may not provide a financial advantage, tax experts say.
Once the dust settles and new policies can be drawn up, federal employees in same-sex marriages will be able to enroll their partners in the Federal Employees Health Benefits Plan. The Obama administration has extended several benefits to gay employees in recent years, but was prohibited by DOMA from providing FEHBP coverage.
“While we recognize that our married gay and lesbian employees have already waited too long for this day, we ask for their continued patience as we take the steps necessary to review the Supreme Court’s decision and implement it,” says Elaine Kaplan, acting director of the federal government’s Office of Personnel Management.
The court’s action today also means that military personnel in same-sex marriages will be able to obtain health benefits for spouses.
But people who will be eligible for coverage under Obamacare starting next year may want to consider the all financial consequences of marriage.
“Same-sex partners with similar incomes may lose out,” says Brian Haile of Jackson Hewitt Tax Service, who sent this memo around today.
For example, he says, same-sex partners who each have an income of $40,000 may be eligible for the premium assistance tax credits under the Affordable Care Act, but only if they remain single.
If they marry (in those states that allow same-sex marriage), then they would lose eligibility because their income would be over the threshold for a household of two.
“Suffice it to say, it’s complicated,” Haile says.
Haile and other tax experts are still sorting it all out. Also yet to be understood fully are all the permutations that arise from conflicts between federal and state laws in states where same-sex marriage is illegal.
Some of the outstanding questions include whether insurance companies will be required to offer policies under Obamacare that cover same-sex domestic partners in these states – and how “affordability” of insurance will be determined when people apply for Obamacare.
Haile says to expect the Internal Revenue Service and the Department of Health and Human Services to issue clarifications as January 1, the start date for the exchanges, draws near.