Section 3 of the Defense of Marriage Act was found to be unconstitutional by the Supreme Court last week in United States v. Windsor, No. 12-307. This action has created more questions than answers for employers and administrators of ERISA plans. Most of this uncertainty centers on the fact that the Supreme Court’s decision did not address Section 2 of DOMA, which provides that states do not have to give full faith and credit to the laws of another state which recognizes same-sex marriage. However, for federal law purposes, the government will look to state law to determine whether someone is a spouse. This creates uncertainty as to whether the state of residence of an employee or plan participant will dictate whether he or she is or has a spouse at the time a right arises or action is required. We are hopeful that federal agencies will immediately issue guidance on this issue. If a spousal benefit issue arises before then that involves these facts, additional consideration is recommended.
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 (the Same-Sex Marriage States). Employers and plan administrators with employees and participants in these states may have immediate issues to address.
To begin the process of unfolding the effect of the Windsor decision, we recommend the following steps:
- Residents of Same-Sex Marriage States – Determine if you have any employees or plan participants who are residents of the Same-Sex Marriage States. Individuals in this category who are in a valid same-sex marriage should be treated as spouses for purposes of federal laws which provide spousal benefits. This affects death benefits under qualified plans and certain rights under welfare plans, such as COBRA continuation coverage, HIPAA special enrollment rights and FMLA. In addition, if income and employment taxes are being imputed on the value of health benefits provided to a same-sex spouse, such withholding should stop.
- Employee Communications – Determine whether you will wait to have employees come forward to inform you that they have a valid same-sex marriage or proactively send a communication to employees in the Same-Sex Marriage States to inform them of the effect of Windsor on their taxes and plan benefits.
- Business Decision– Determine your company’s position on offering equivalent spousal benefits to same-sex spouses. While the holding in the Windsor case and expected guidance from federal agencies may require certain outcomes, the discussion at your company regarding same‑sex spousal benefits should begin as soon as possible.
In addition to the situation created by a same-sex married couple who moves to a state which does not currently recognize their marriage, additional situations are uncertain – can ERISA plans that have spousal coverage continue to exclude same-sex spouses, how are civil unions treated under federal laws, and many more. We will continue to provide information and analysis on this topic.