Financial Challenges for LGBTQ+ Service Members

Investing News

It’s been just a decade since lesbian, gay, and bisexual service members could serve openly, and less than a year for transgender service members (in addition to a brief period during the Obama administration). Despite making huge strides and gaining important rights, some issues still persist for LGBTQ+ service members and their families, many of which pose financial challenges. Here’s a look at the discriminatory barriers the community has overcome—and some they’re still fighting.

Key Takeaways

  • Service members who were forced to leave service under “don’t ask, don’t tell” were set back financially—they lost short-term income and benefits, but also long-term security such as retirement and veterans’ medical care.
  • As of now, the military’s health insurance only covers assisted reproductive service if “medically necessary and combined with natural conception.”
  • Prior to 2013, any same-sex couple—military or not—missed out on years of potential tax breaks and financial benefits, including retirement, burial, and GI Bill benefits.

Historic Barriers

Though policies changed over time, for the most part, LGBTQ+ people were banned from serving in the U.S. military until 1993. That year, the federal “don’t ask, don’t tell” (DADT) policy went into effect.

‘Don’t ask, don’t tell’

DADT permitted gay, lesbian, and bisexual people to serve. The trade-off: They had to serve in silence and, if their identities were discovered, they could be discharged.

Congress repealed DADT in 2011, allowing open LGB service, and when the Defense of Marriage Act was struck down in 2013, the military started extending spousal and family benefits to same-sex married couples. But many states didn’t permit same-sex marriage until the 2015 Supreme Court decision that expanded it nationwide.

The conflicting state and federal laws left gaps in protection. For example, a couple who married in a state that adopted same-sex marriage early—such as New York in 2011—wouldn’t receive federal recognition and benefits until the military started extending benefits in 2013.

Plus, many states still didn’t recognize same-sex marriage until 2015, which created confusion for couples stationed there. They would have to marry in another state that allowed it to get the military to recognize the marriage, but with conflicting laws and policies, this didn’t always go smoothly. These issues left some families in limbo without military or governmental benefits for years, such as spousal moving or living expenses, health insurance, life insurance, or tax breaks. Additionally, the spouses of LGBTQ+ service members who retired before marriage equality still do not have access to military retirement and burial benefits, says Jennifer Dane, an LGBTQ+ Air Force veteran who served under DADT and is now executive director and CEO of the Modern Military Association of America.

During the 17 years DADT was in place, it is estimated that more than 14,000 troops were discharged for sexual orientation, according to the Center for American Progress. The think tank estimates an additional 4,000 chose not to reenlist each year due to the discriminatory policy.

These numbers don’t tell the whole story, Dane says. “These facts and figures do not include those who were kicked out under other types of discharges such as administrative, bad conduct, character unbecoming, and many others,” she explains. “It also doesn’t highlight the fact that service members were also honorably discharged, but marked with the scarlet letter of ‘homosexual conduct’ under their reenlistment code, nullifying any future service. They may have retained their military benefits, but it tainted their lives and livelihoods forever.”

Regardless of the type of discharge, service members who were forced to leave service under DADT were set behind financially—not only from losing short-term income and benefits but also long-term security like retirement and veterans’ medical care. Additionally, those who were dishonorably discharged lost access to jobs, free veterans programs, and scholarships that require honorable discharges, Dane explains. MMAA offers free legal services to help those discharged under DADT restore their records.

Transgender service members

Transgender service members have faced a different battle. They were not included in DADT and remained prohibited from serving until 2016, when the Obama administration lifted the trans service ban. The Trump administration put it back in place soon after, and it was again repealed in 2021 by the Biden administration.

Trans troops who were discharged or forced to separate due to the two bans were exposed to similar loss of financial stability and benefits such as healthcare. The policies were created via presidential executive order rather than Congressional legislation, hence the pingponging, meaning a future ban could be implemented unless legislation is adopted to prevent it.

Areas That Still Pose Financial Challenges

Even though same-sex couples can now marry and access the same benefits as heterosexual couples and trans troops can serve openly, some barriers remain in place.

Building a family

For LGBTQ+ people, the process of having or adopting children is notoriously expensive and typically not covered by Tricare, the military’s health insurance. Even though same-sex couples who are both men aren’t experiencing infertility—they biologically can’t have a child—the military system doesn’t accommodate for that and lumps them into the same framework as heterosexual couples. 

Dane notes that even though the VA’s current policy states that it does not discriminate in terms of who can receive fertility benefits, “There are still significant barriers that same-sex couples and folks who are single veterans face,” one of those barriers being that if you are not married to a man, you have to provide your own sperm. This isn’t inclusive for LGBTQ+ families and families who are single and need the support.

LGBTQ+ military advocates are working to improve family-building Tricare coverage. But as of now, Tricare’s policy only covers assisted reproductive service if “medically necessary and combined with natural conception.” It may pick up the bill for some diagnostic testing, but it specifically doesn’t cover artificial or intrauterine insemination, non-coital reproductive services, or any costs for donors, semen banks, or surrogacy. Some assisted reproductive services are included only if the service member was injured while on active duty.

Due to this gap, some fertility clinics offer military discounts, though the massive out-of-pocket expenses may require financing such as IVF loans. There are also some family-building grants. For additional information or resources, look to the Military Birth Resource Network or the new Military Family Building Coalition.

Caring for LGBTQ+ dependents

With the integration of openly serving LGBTQ+ troops, the military has gradually started offering care for service members in areas such as HIV prevention and hormone therapy. But when it comes to the needs of LGBTQ+ kids and spouses, many military treatment facilities don’t have the experts or training to support their needs. In some cases, they can refer dependents to local providers in the Tricare network, but there may not be any, and they might live in a state that has banned gender-affirming care for youth (although those laws don’t apply to on-base care).

As of now, gender-affirming healthcare needs don’t qualify someone for the Exceptional Family Member Program (EFMP)—a designation for dependents with “special needs,” from autism to asthma. With EFMP classification, the military makes accommodations to try to station the family at a base and/or area with the right resources. Currently, if a military family with a trans youth is at a base that’s too small or inexperienced to offer gender-affirming care, their only option is to try to find it in their local community (which may not be available or—depending on new state laws—be legal). Unless policies change and the youth can be designated EFMP, it’s possible the family will encounter the same hurdles at their next duty station.

Congressional Democrats have proposed the ​​Armed Forces Transgender Dependent Protection Act, which would bring those dependents under EFMP to ensure access to care and prevent the family from being stationed in a state with discriminatory healthcare laws. Both MMAA and the trans military advocacy organization SPARTA are actively working to improve access to care for LGBTQ+ dependents.

Facing state-level discrimination

Though federal civil rights protections prevent discrimination on the basis of certain types of identity, such as race or religion, there’s no explicit protection for sexual orientation or gender identity. LGBTQ+ activists have long fought for the passage of the federal Equality Act, which would amend the 1964 Civil Rights Act to include LGBTQ+ rights in all key aspects of life.

Though it passed twice in the House, the Equality Act remains bottlenecked in the Senate. Some cities and counties have passed nondiscrimination laws to protect their LGBTQ+ citizens, but many conservative state legislatures are passing a record number of anti-LGBTQ+ laws that could affect LGBTQ+ military families stationed in those states. These laws restrict everything from adoption to medical care, typically on religious grounds.

In lieu of the Equality Act, the federal government has intervened in piecemeal ways. A 2020 Supreme Court decision now prohibits workplace discrimination for LGBTQ+ people, which could make it easier for an LGBTQ+ military spouse to find work in any state.

The federal government also recently implemented several new separate policies that ban LGBTQ+ discrimination in housing, medical care, and credit. However, according to the Human Rights Campaign, these create a patchwork of reversible policies. Until the Equality Act is in place, depending on where military families are stationed, they may still encounter various forms of discrimination—some legal, some not. For additional information, the nonprofit American Civil Liberties Union has a primer on LGBTQ+ rights and a hub for reporting illegal discrimination.

Catching up on savings

Though the military started providing benefits to same-sex married couples in 2013, many troops couldn’t marry until 2015, when all states adopted marriage equality. Prior to that, any same-sex couple—military or not—missed out on years of potential tax breaks and financial benefits, including retirement, burial, and GI Bill benefits, Dane says.

Younger service members who joined after DADT and marriage equality may not face as many of these issues. But even as discrimination has become illegal in more areas, it can—and does—still happen. According to a 2018 survey on LGBTQ+ finances by credit bureau Experian, 62% of respondents reported experiencing some form of discrimination that impacted them financially. The report also found that the LGBTQ+ community struggles more to save money. Other surveys in recent years have found that the LGBTQ community has lower salaries and less in retirement savings than the general population.

This means it’s crucial for LGBTQ+ military families to focus on financial health, from creating a budget to focusing on retirement savings. If family-building is in your future, it’s wise to start saving for it well in advance. Many bases offer free financial counseling, but you could also hire a financial planner in the LGBTQ+ community who’s well versed in navigating common challenges.

Amid ever-changing laws and policies, it’s also smart to hire a lawyer to create wills and other estate planning documents to add an extra level of protection for your family. This is especially crucial if you have children because same-sex and second-parent adoption laws vary and are at times barred depending on the state.

The Battle Isn’t Over

The LGBTQ+ military community has made astonishing progress in the past decade, seeing the end of discriminatory policies and the addition of more protections. Though this has offered more financial security for many LGBTQ+ military families, they still face barriers, especially with family-building, dependent care, catching up financially, and navigating state-level discrimination.

There is also still work to be done to include intersex, gender diverse, and nonbinary people within the military, Dane says. Her organization is advocating for these populations as well. Much progress has been made, but the battle for full equality continues.

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