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Advising Same-Sex Married Clients After Medicare’s Rapid Changes

Same-sex coupleBy now, most CPAs should be familiar with tax strategies for same-sex couples, but due to a Supreme Court ruling in 2015, one possibly overlooked area CPA financial planners should address is the Medicare benefits available to couples in a same-sex marriage.

Before 2013, married couples of the opposite sex could qualify for Medicare benefits through their spouse, and before the U.S. Supreme Court’s Obergefell vs. Hodges ruling in 2015, state law still controlled whether a same-sex couple was treated as married. In layman’s terms, this resulted in inequality among same-sex couples, where some had full marriage rights because of the state in which they lived, while others were denied marriage rights because of their state of residence.

Consider this fictional older couple, “Mark and Steve.” Before Obergefell, if Mark and Steve married in a state that recognized same-sex marriages, they might have lost their Medicare by moving to a state that did not recognize the same-sex marriage. Of course, by now, we all know the Supreme Court ruled that the Defense of Marriage Act (DOMA) was unconstitutional (The United States v. Windsor). As a result, married same-sex couples have rights under Medicare that were previously denied, opening up eligibility opportunities.

The 2015 Obergefell ruling provided much-needed clarification, requiring that states issue marriage licenses to same-sex couples and recognize same-sex marriages that are legally performed in other jurisdictions. However, one more important thing occurred: with the Obergefell ruling, Medicare spousal rights were expanded to all married couples. For Mark and Steve, their move to a state that did not recognize same-sex marriage would no longer result in a loss of their Medicare rights due to where they lived.

Here’s where you can help. If for some reason, a client in a same-sex marriage previously applied and did not receive Medicare benefits, have them reapply. If they’re ultimately found to be eligible, they can try to get benefits retroactive to their initial filing date.

While Obergefell may have clarified the legal issues, married same-sex couples should never assume anything regarding their Medicare benefit rights. To protect their rights, advise your clients who are in same-sex marriages to seek authoritative sources for information, beginning with resources from Medicare. Another resource for recently updated information can be found in the Social Security Administration’s Program Operations Field Manual.

Remember that your clients are looking to you for financial planning guidance and advice.  It’s your role to help them through these complex situations.

For more resources: I authored the recently updated The CPA’s Guide to Financing Retirement Healthcare, published by the AICPA’s Personal Financial Planning Division. The Guide is accessible to PFP/PFS section members and can be downloaded here. For a deeper dive into Medicare filing tips and advising clients on enrollment, PFP/PFS section members can listen to this podcast by Ted Sarenski, CPA/PFS.

James Sullivan, CPA/PFS, President, MedicareAware. Jim works with special financial planning needs of older individuals with chronic illness and their families. He frequently writes for the AICPA and is a regular speaker for the ALS Association, Greater Chicago Chapter. Jim is a member of the Board of Directors of ESSE, a nonprofit organization that provides adult day care services for clients with Alzheimer’s disease and other dementias. Contact him at jim@medicareaware.com.

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