We’ve noticed a lot of chatter about the recent Supreme Court decision regarding the 1996 federal Defense of Marriage Act (DOMA). The act, which defines marriage as a “legal union between one man and one woman as husband and wife”, had been instrumental in determining federal benefits eligibility. In its June 2013 ruling, the Court decided that DOMA is in violation of the U.S. Constitution’s Equal Protection Clause.
Clearly, this is a decision that directly impacts employers and employee benefits.
As a result of this ruling, legally married same-sex couples in 13 states and the District of Columbia are now entitled to the same federal benefits as married opposite-sex couples. In addition to Washington, D.C., same-sex marriages are legally recognized in California, Connecticut, Iowa, Massachusetts, Delaware, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Maine, Maryland, and Washington. Like many other states not on that list, Pennsylvania still enforces its ban on same-sex marriage. However, the ban is a point of contention among state lawmakers and is under fire by the American Civil Liberties Union. Some elected officials are already openly defying the ban, granting marriage licenses to same-sex couples and officiating at same-sex marriage ceremonies. This will certainly be a hot issue in upcoming elections in Pennsylvania and around the nation.
Employers in states that recognize same-sex marriages will be impacted in the following areas:
1. Family and Medical Leave Act (FMLA): While DOMA was in place, employers could lawfully deny an employee in a same-sex marriage FMLA leave to care for an ailing spouse, even if they lived in a state that recognized same-sex marriages as legal. If the employer chose to allow the leave, it could not be counted against an employee’s federal FMLA entitlement. That could obligate the employer to additional leave allotments if another FMLA-qualified event occurred.
For FMLA purposes, the definition of “spouse” will now be determined by your state law, with no federal override. If you are in one of those thirteen states or Washington, DC, or if your state eventually legalizes same-sex marriage, you will need to adjust your FMLA and leave policies accordingly.
2. HIPAA open enrollment: Under the Health Insurance Portability and Accountability Act (HIPAA) marriage is a qualifying event which triggers a special allowance for employees to make immediate changes in their health plan coverage. Up until now, newly-married same-sex couples had to wait until the next company-wide open enrollment to add a spouse to their policy, if it was an option.
Since the DOMA ruling, newly-married same-sex couples in “legalized” states will now be allowed to add their spouse without waiting.
3. Tax-free health benefits: Up until now, benefits provided to the same-sex spouse of an employee were subject to federal taxes (to be paid by the employee and the employer), unlike those provided to an employee’s opposite-sex spouse. Now those benefits will be tax-free for residents of the states that recognize same-sex marriage.
4. Consolidated Omnibus Budget Reconciliation Act (COBRA): Under COBRA, spouses are eligible to receive continuing health benefits after an employee experiences certain qualifying events (including termination, divorce, reduction of hours, or death of the employee). Now same-sex spouses will be eligible for continuing coverage after such qualifying events.
The ruling may also impact other fringe benefits, long-term care insurance, retirement, flexible spending accounts, Section 125 plans, Social Security and Medicare benefits. Employers can expect the government to issue more guidance in these areas and others.
For now, employers in the states that have legalized same-sex marriage should review employee benefit plans and employment policies to ensure they are compliant with the new laws.
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