IRS same-sex couple ruling has implications for ACA

The news Thursday that the Internal Revenue Service will recognize same-sex marriages, no matter where the couples live, will have healthcare implications.

They're not necessarily positive ones, according to Brian Haile, senior vice president for healthcare policy at Jackson Hewitt Tax Service.

In the hours and days after the U.S. Supreme Court invalidated the Defense of Marriage Act—which prohibited the federal government from recognizing gay marriages—advocacy groups and legal experts predicted the ruling would have a variety of effects on the way the couples' taxable income and whether they qualify for subsidies for coverage under the Patient Protection and Affordable Care Act.

What remained to be seen, though, was how widespread those changes would be if couples don't reside in the states where they got married. The Obama administration's answer can be good news or bad news, depending on the incomes each spouse brings to the marriage.

“Same-sex partners who each have an income of $40,000 may be eligible for the premium tax credits under the ACA, but only if they remain single,” he said. “If they marry, then they would lose eligibility because their income would be over the threshold for a household of two.”

Haile added that if same-sex partners have two different annual incomes, say $30,000 and $80,000, it might make sense for them to not get married since the partner making $30,000 a year would lose out on subsidies after their joint income puts the household over the limit for subsidies.

Another problem arises if one partner's employer offers spousal coverage: The non-employee spouse could lose eligibility for the tax credits. “The ACA limits the tax credits to spouses and dependents who do not have access to affordable coverage,” he said. “Even if the employer does not subsidize spouse or dependent health coverage, the fact that the spouse has access may disqualify him or her” from subsidies.

Separately, same-sex couples also benefitted this week when Wal-Mart Stores, America's largest private employer with 2.2 million employees, announced it would extend health benefits to same-sex couples, as well as domestic partners.

Wal-Mart's announcement was significant not only because of the sheer size of the retailer, but also because it comes at a time when many companies are scaling back health benefits or increasing cost sharing in the wake of changes brought about by the healthcare reform law. Wal-Mart's announcement came a matter of days after UPS said it was eliminating coverage for all spouses of employees, citing additional costs associated with the Affordable Care Act.

As to whether other large employers would follow in Wal-Mart's footsteps, Paul Fronstin, a senior research associate at the nonpartisan Employee Benefit Research Institute in Washington, says no. A majority of large employers already provide same-sex benefits to their employees, he said. Indeed, the Washington-based Human Rights Campaign reports that 62% of Fortune 500 companies offered benefits to same-sex partners, up from just 34% in 2002.

However, the move by Wal-Mart could put pressure on the ones that don't, Fronstin said.

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