Currently, same-sex marriage is legal in 13 states and the District of Columbia. In these states, same-sex couples enjoy the same state employee benefits as heterosexual couples. Until recently, however, they lacked equal access to federal employment benefits.
This all changed in June 2013, when the U.S. Supreme Court struck down Sec. 3 of the federal Defense of Marriage Act, which had defined marriage as exclusively between a man and a woman. Now, in states that recognize same-sex marriage, spouses are entitled to federal employment benefits as well.
These states include California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington.
Employees should be aware of these expanded benefits. Employers should be prepared to provide them, which includes promptly amending plan language.
Changes to Health Plans
Whether or not a company offers health insurance to spouses, or same-sex spouses, is controlled by state and not federal law. Therefore, this option is not affected by this decision.
Previously, employees could not use pre-tax dollars to pay for healthcare coverage for their same-sex spouses. Plus, employers were required to impute income to the employees when the cost of coverage was subsidized by the employer. This is no longer the case. Employers in states that recognize same-sex marriage should no longer withhold federal income, FICA and FUTA taxes on the value of employer-subsidized coverage for same-sex spouses.
Depending on pending rules, same-sex couples may be able to claim a refund of taxes paid (for open tax years) arising from imputed income for benefit coverage in prior plan years.
In these states, same-sex spouses can now enjoy special enrollment rights; COBRA continuation coverage; cafeteria, flexible spending account, health savings account and health reimbursement account plan access; and dependent care reimbursement account access.
Changes to Welfare Plans
Under the Family Medical Leave Act, covered employers must allow employees to take up to 12 weeks of unpaid leave in order to care for certain relatives, including spouses. The Supreme Court ruling extends FMLA protections to same-sex spouses in states that recognize same-sex marriage.
Changes to Retirement Plans
Now, same-sex couples in 13 states and D.C. can enjoy full spousal rights with respect to pension and other retirement benefits, including survivor annuity rights under defined benefit pension plans and beneficiary rights under 401(k) plans.
Same-sex spouses may also defer distribution of death proceeds from a retirement plan until age 70.5. In the case of divorce, qualified domestic relations orders can now be applied to same-sex marriages.
Same-sex spouses can now collect Social Security retirement benefits based on either their own earnings or their spouse’s Social Security retirement benefit. When one spouse dies, the surviving spouse may qualify for Social Security survivorship benefits.
Still Much to Be Determined
When a couple is married and resides in a state that recognizes same-sex marriage, extension of federal employment benefits to same-sex couples will be fairly straightforward. When the couple is not married and resides in a state that does not recognize same-sex marriage, state law preempts federal law and the same-sex spouse will not be eligible for federal employment benefits.
Questions arise when a couple is married in a state that recognizes same-sex marriage, but resides and works in one that does not. Questions also arise when an employer has operations in states that recognize and do not recognize same-sex marriage. These questions will need to be answered.
Call an Employee Benefits Lawyer
The law surrounding same-sex marriage and employee benefits can be confusing, especially as the recent U.S. Supreme Court decision plays out. Plus, the facts in each case and the laws in each state are different. This article provides a brief, general introduction to the topic. It is not legal advice. For more detailed information specific to your own situation, please contact an employee benefits lawyer.