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Gay marriage law prompts benefits cut

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WASHINGTON—In response to the legalization of same-sex marriage in the District of Columbia, the Catholic Charities of the Archdiocese of Washington will bar all spouses of employees from enrolling in its benefits plan, regardless of their sexual orientation, the organization said last week.

“The change to our benefits package allows us to remain in compliance with District of Columbia law; adhere to the teachings of the Catholic Church on marriage, defined as solely between a man and a woman; and allow us to continue our partnership with the district in serving more than 68,000 people last year in need,” a spokesman said.

The move does not affect benefits offered by other Catholic Charities offices, which operate independently, the spokesman said. The ban also does not extend to coverage for dependent children, and does not affect coverage for any spouses already enrolled in the plan.

The Washington arm of Catholic Charities employs approximately 850 people, about 10% of whom have spousal coverage, the spokesman said.

The District of Columbia's Religious Freedom and Civil Marriage Equality Amendment Act, which expands the definition of marriage to include same-sex couples, took effect last week after the U.S. Supreme Court declined to hear a challenge of the law. The District of Columbia joins Connecticut, Iowa, Massachusetts, New Hampshire and Vermont in allowing same-sex couples to marry.

Employee benefits experts say the Washington Catholic Charities office may have decided to take the drastic step of excluding all spouses from coverage because, unlike private, self-funded employers that are governed by the Employee Retirement Income Security Act, church welfare plans are not exempt from state and local mandates.

Private employers governed by ERISA can “choose to define "spouse' any way they want,” said Antoinette Pilzner, a partner at McDonald Hopkins P.L.C. in Bloomfield Hills, Mich. “Church plans generally are not subject to ERISA. As a result, they are subject to state mandates, regardless of whether they are self-insured.”

Catholic Charities of Maine Inc. opted into ERISA in July 2003 in response to a 2002 city of Portland ordinance requiring all employers that accept housing and community development funds from the county to provide domestic partner benefits. Catholic Charities of Maine is one such organization.

Catholic Charities of Washington, whose plan is self-insured and administered by Care First Blue Cross Blue Shield, declined to say why it didn't opt into ERISA instead of discontinuing all future spousal coverage, regardless of gender.

The move by Catholic Charities of Washington runs counter to a trend among employers to add coverage for same-sex domestic partners and spouses, employee benefits experts say.

“A growing number of employers offer benefits to domestic partners. Virtually all of them provide benefits to employees, and all eligible dependents, who include legal spouses. Presumably, in any jurisdiction that recognizes same-sex marriages, the employer's plan would cover the spouse,” Helen Darling, president of the National Business Group on Health in Washington, wrote in an e-mail.

“While faith groups may have their own views and values, most employers, especially those engaged in business, would not be likely to take these kinds of positions,” Ms. Darling wrote.

“I would consider this an aberration,” Ms. Pilzner said. “The trend has been to add coverage for domestic partners. It's a valuable recruiting and retention tool.”

According to the Human Rights Campaign, a national lesbian, gay, bisexual and transgender civil rights organization based in Washington, 83% of Fortune 100 and 59% of the Fortune 500 offer health care coverage to domestic partners. In addition, more than 250 nonprofit employers provide domestic partner coverage, HRC reports.

Joanne L. Hustead, senior health compliance specialist at the Segal Co. in Washington, said making it harder for same-sex spouses to obtain health care coverage contradicts the efforts by Congress to reduce the ranks of the uninsured.

Although a growing number of employers are opening up their health plans to same-sex domestic partners and spouses, some employers have been discouraging employees from enrolling their spouses when they are eligible for other coverage, such as through their own employers, benefit experts note.

Some employers impose “spousal surcharges” on employees who enroll such spouses, noted Craig Hasday, president of Frenkel Benefits L.L.C., a New York-based employee benefits broker and consultant.

But, unlike in the case of Catholic Charities of Washington, which made the change to reflect its religious stance, these other “employers are looking at ways to curtail coverage as part of a larger cost-containment effort,” Mr. Hasday noted.