Key Section of DOMA Ruled Unconstitutional: The Supreme Court recently struck down Section 3 of the Defense of Marriage Act (DOMA), which required same-sex spouses to be treated as unmarried for purposes of federal law. Under Section 3 of DOMA, same-sex marriages were not recognized for federal purposes even if recognized under state law. The Supreme Court’s decision leaves the definition of marriage to the states, and did not change Section 2 of DOMA, which allows states to refuse to recognize same-sex marriages performed in another state.
Same-Sex Marriage States
Same-sex marriages are permitted in California, Connecticut, Delaware, the District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota (effective August 1, 2013), New Hampshire, New York, Rhode Island (effective August 1, 2013), Vermont and Washington.
Scope of Ruling
The scope of this decision this not been established, which leaves certain questions unanswered, such as:
- State Specific: If two same-sex individuals are married in a state that recognizes same-sex marriages, will that marriage be recognized under federal law if those individuals move to a state that does not recognize same-sex marriages?
- Retroactivity: Will same-sex spouses (or their employers) have any retroactive rights? Will plan sponsors have a period of time in which to amend their plan documents to comply with this decision?
- Employer Discretion: Will employers have discretion to define a subset of “spouses” to whom it will offer coverage, and therefore recognize (or not recognize) same-sex marriages?
Other Issues to Consider
Employers should consider the following issues that may affect their health and welfare plans when a same-sex marriage is recognized by federal law.
- Employee Tax: Prior to this ruling, employee premiums for health coverage for a same-sex spouse or the spouse’s children had to be paid on an after-tax basis. Pre-tax treatment is now permitted for employee contributions for health plan coverage, and medical reimbursements for eligible expenses are permitted from FSAs, HRAs and HSAs for a same-sex spouse or the spouse’s children.
- Employer Tax: Because of the pre-tax premium described above, no FICA or FUTA tax will be payable on employer-provided health coverage for an employee’s same-sex spouse.
- COBRA: COBRA rights must now be provided for same-sex spouses covered by employers’ health plans to the same extent as is required for opposite-sex spouses. And, divorce between same-sex spouses will now be a COBRA qualifying event.
- HIPAA: HIPAA special enrollment rights will now apply to same-sex spouses to the same extent it is required for opposite-sex spouses.
- Life Insurance: Favorable tax treatment of group term life insurance coverage may now be provided to same-sex spouses of employees to the same extent that tax treatment is available to opposite-sex spouses.
Compliancedashboard will be updated as more guidance is released describing how employers should handle the issues brought about by this ruling.