Offering health care benefits to employees' same-sex spouses is not obligatory for many large U.S.-based companies, but it's still a sound business decision, benefits experts say.
Late last year, the National Railway Labor Conference, a Washington-based nonprofit trade association that represents more than 30 large U.S. freight carriers in collective bargaining agreements with labor unions, announced that its member companies had agreed to provide health care coverage to their employees' same-sex spouses beginning Jan. 1, 2014.
Several other large employers made similar announcements late last year, including Exxon Mobil Corp., American Financial Group Inc. and Intermountain Health Care Inc., as well as the nation's largest employer, Wal-Mart Stores Inc.
Although most companies said the inclusion of same-sex spouses in their health care plans was driven in part by the U.S. Supreme Court's decision in United States v. Edith Windsor et al., which partially overturned the federal Defense of Marriage Act, several emphasized that the court's decision did not compel them to make the changes.
Rather, they pointed to strategic and operational justifications for extending the benefits, including reducing administrative burden, attracting and retaining talent, aligning with consumer demographics and preferences, and securing public contracts.
In early December, the railway trade association said although the Supreme Court's decision by itself did not require its member carriers to include same-sex spouses in their benefit plans, the carriers agreed to extend coverage to those spouses to address administrative complexities — specifically, changes to the federal tax code granting equal status to legally married same-sex and opposite-sex couples — that resulted from the court's ruling.
“We thought this was an appropriate time to change our plans,” Kenneth Gradia, chairman of the National Carriers' Conference Committee, the railway trade association's collective bargaining agent, said in a statement.
“Employers certainly tend to avoid drawing negative attention or creating complexity where it need not exist, and they're looking to apply a more consistent definition of "spouse' across their benefit plans,” said Jack Towarnicky, employee benefits attorney at Willis North America Inc.'s national legal and research group in Columbus, Ohio.
“As we learn more from the federal government in terms of guidance and regulations following the Supreme Court's decision, I would expect many employers to extend welfare plan eligibility to same-sex spouses and/or remove any distinction or difference from opposite-sex spouses,” he said.
Wal-Mart, which self-insures its group health plan and thus is not required to offer benefits to same-sex spouses, sent a memo to its employees in August saying its decision to offer spousal coverage to gay couples was motivated largely by its desire to simplify the administration of its benefits program.
“We operate in 50 states, hundreds of municipalities and Puerto Rico,” the company's memo said. “By developing a single definition (of "spouse') for all Wal-Mart associates in the U.S. and Puerto Rico, we are able to ensure consistency for associates in various markets.”
Wal-Mart executives said in the memo that the decision also advanced the company's need to remain competitive in its efforts to attract and retain top talent, noting that 28 of its 30 closest rivals in the retail industry already provided for same-sex and/or opposite-sex domestic partners.
“I think employers see the tide moving toward offering these kinds of benefits on a more equal basis, and they don't want to lose out in that race for potential employees” by seeming less focused on equality than their competitors, said Wade Symons, a Portland, Ore.-based principal and employee benefits attorney at Mercer L.L.C.
“There's been a recognition among large employers that family structures are changing, and moving forward with the times seems to be important to a lot of them,” Mr. Symons said.
About 80% of companies with 10,000 or more full-time employees already provided health care coverage for same-sex spouses at the time of the Windsor ruling in June, according to a survey published by the International Foundation of Employee Benefit Plans.
“Many of the trends that we've been tracking in terms of benefits for same-sex spouses predate all of the marriage equality laws we've seen passed over the last several years,” said Deena Fidas, director of workplace equality at the Washington-based Human Rights Campaign.
“The rate at which corporations have been extending benefits to same-sex spouses has been steadily going up since 2002,” Ms. Fidas said.
Aside from administrative simplicity and competition for talent, experts say many large employers recognize the value of corporate policies — including employee benefit eligibility — that reflect the diverse nature of their consumers' demographics and attitudes.
“Part of our diversity leadership team's job is to take a look at how we're viewed by our customers, and how we represent ourselves in the communities that we serve,” said Philadelphia-based Robert Pompey, head of commercial management administration at TD Bank N.A., which began covering employees' same-sex spouses and domestic partners in 2009. “We want to look and feel like the customers we serve.”