Equal Benefits for All
Last year’s Supreme Court decision in Obergefell v. Hodges granted equal marriage rights to same-sex couples in all 50 states. The ruling entitles LGBT couples to all of the same financial, tax and estate planning benefits as opposite-sex couples, including, of course, employee benefits.
A year later, research from Lincoln Financial Group shows how LGBT individuals are responding, particularly to their workplace benefits. The good news? Many LGBT employees are taking action. About a third have proactively made changes to their workplace benefits in response to the ruling.
In the past year, 28% of LGBT employees overall, and 35% of those currently married or in a domestic partnership, have either reevaluated their workplace benefits, enrolled in a new benefit or increased their contribution to an existing benefit.
Interestingly, ancillary benefits have seen the biggest impact. Some 14% of LGBT employees who are married or in a domestic partnership have enrolled in a new nonmedical insurance plan, compared to 11% who say they have enrolled in a new health insurance plan. And 7% have made changes in the retirement space, meaning they’ve enrolled in a new retirement plan or increased contributions to their current one as a result of the ruling.
The bad news: A broad lack of awareness is still apparent. So while many LGBT employees are on the right track to making the most of their benefits, a larger percentage are making no changes. Why? The numbers suggest they may not know where to begin.
Some 50% of all LGBT employees, and nearly 40% of those who are married or in a domestic partnership, say they are still unaware of how the marriage equality ruling affects their workplace benefits.
That’s a problem. Obergefell v. Hodges marked a major legislative milestone, and LGBT employees, married or not, should be aware of its implications.
About 50% of LGBT employees think their benefits information is confusing, which is right in line with the general population. We know benefits, particularly those outside of medical and retirement, are typically not well known or easily understood. That’s an issue for all employees. Add a big legal change to the mix, and you’re bound to see confusion.
But here’s the root of the problem: just 21% of employed LGBT Americans say their employer is proactive in making sure employees understand their benefit options.
Being proactive with benefits communications is always important, but when a change like this occurs, it becomes even more vital. LGBT employees clearly know about the ruling, but their employers should be explaining how it specifically affects their benefits and what actions they may need to take.
So what do LGBT employees need to know? Start with these simple but effective reminders:
- Spousal Benefits Coverage: The Affordable Care Act mandates employers offer health coverage to their employees, but there are no requirements for spouses. If an employer chooses to extend medical benefits, and even nonmedical coverages like dental and vision insurance, to employees’ spouses, all spouses—including same-sex—are now eligible. Employers can provide more information relative to their specific benefit plans.
- Retirement Rights: The Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code of 1986 offer spousal rights that may now affect married LGBT employees’ retirement distribution options. Employers can work with their plan providers to communicate more specific information.
- Beneficiaries: Beneficiary designations may need to be updated post-ruling. If a same-sex couple has been together for a period of time prior to marrying, making this type of change might not be top of mind. It should be.
- Life Events: LGBT marriages qualify as life events and allow employees to make benefits changes immediately.
- Cafeteria Plans: Flexible spending accounts, health savings accounts and health reimbursement accounts allow for the tax-free reimbursement of a spouse’s medical expenses. Same-sex couples are now able to contribute to these plans. Again, employers can communicate customized messages here relative to the plans offered.
Straightforward communication on these items can help LGBT employees get the most out of their benefits and boost their confidence in the employer.
Marriage equality presents an opportunity to provide benefits education to LGBT employees—and even to the broader employee population. Employers can leverage this legislative event as a reason to communicate off cycle, outside of the open-enrollment season clutter.
About 90% of employees say they want to enroll in benefits they are familiar with and understand. That is consistent regardless of age, gender or sexual orientation.
Employers put a lot of time, money and effort into designing benefit packages that meet employees’ needs. Be sure they know enough to put those packages to good use, especially in times of change.