Gay Couples to Enjoy New Perks (and Penalties) Under Obamacare

The Supreme Court's ruling Friday to legalize same-sex marriage nationwide means that gay couples who marry will enjoy all the legal benefits of marriage: hospital visitation rights, COBRA health insurance, and others.

But mixed in with the perks, gay and lesbian newlyweds will find some newfound annoyances that come with a fully legal and equal right to marry. Among them: Obamacare's so-called marriage penalty.

The essence of the unofficial penalty, as described by The Atlantic in 2013, is that individuals who could qualify on their own for the Affordable Care Act's tax credits or cost-sharing subsidies could lose access to those benefits if they get married and the union pushes their joint household income above the threshold to qualify for assistance. The number of people affected is likely relatively small—their income would need to be hovering around 400 percent of the federal poverty level for the tax credits and 250 percent for the cost-sharing subsidies—but for those affected, it is a real concern.

The issue is already familiar to same-sex couples who married after the Supreme Court's 2013 decision to invalidate much of the federal Defense of Marriage Act. The Internal Revenue Service said after the ruling that legally married same-sex couples would qualify for the federal health insurance aid no matter where they lived. Tim Jost, a Washington and Lee University law professor, wrote in Health Affairs that while federal recognition would bring certain advantages to those couples, "it will not generally bring benefits under the Affordable Care Act."

In fact, Jost wrote, while there are a few scenarios in which couples would benefit, there were multiple others in which they could face a net loss in assistance by combining their incomes for the law's purposes. "[I]n almost any other scenario where both have incomes below 400 percent of poverty or one is below 400 percent and the other earns much more than 400 percent, as a couple they come out with less assistance," he said.

But these are decisions that married gay couples will now have the chance to make.

"Now, of course, the right to marry doesn't mean that people have to marry," said Larry Levitt, vice president of the Kaiser Family Foundation, in an email. The Court's ruling "just presents same sex couples the same choices with regard to health insurance as everyone else already had."

There is also the so-called family glitch, which means that people who would otherwise be eligible for ACA assistance aren't because they could get insurance through their spouse—even if their spouse's insurance is expensive.

"That is, if you're married and you get an offer of health insurance as a spouse but it's very expensive, you might get caught in the family glitch," Levitt said. "If you weren't married, you could be eligible for exchange subsidies."

But in light of the Supreme Court's decision to legalize same-sex nuptials nationwide, couples could actually see a positive inverse of the marriage penalty, said Kellan Baker, who studies LGBT health policy for the liberal Center for American Progress.

Before the ruling, legally married gay couples qualified for the tax subsidies to buy private insurance no matter where they lived, so long as their income was between 100 and 400 percent of the poverty line. But if their income slipped below the poverty line, they became ineligible for the subsidies.

They would instead qualify for Medicaid if their state expanded the program under the ACA—but if the state didn't recognize same-sex marriage, they would be treated as "legal strangers," Baker said, even if they still qualified for the program as individuals.

While nothing is 100 percent certain with the Court's ruling so fresh, Baker and others expect that the decision should remedy that issue—one more of dignity than financial benefits—for same-sex married couples and they should be able to move seamlessly as couples between the insurance marketplaces and Medicaid.

"The ability of state Medicaid programs to say no to marriage equality was predicated on the very same issues that brought the case to the Court in the first place," Baker said.

And more broadly, gay couples living in states that previously wouldn't allow them to marry will see benefits that other married couples have long taken for granted, such as the ability to get on the same health insurance plan as their spouse and the right to visit a sick spouse in the hospital. Even within the narrow scope of health care, big changes are coming.