The Supreme Court has already gifted HR with two pro-employer rulings this week. So how will the High Court’s decision about the Defense of Marriage Act (DOMA) affect HR?
As you’ve probably heard by now, the U.S. Supreme Court just struck down DOMA. This will have some far-reaching effects on benefits plans.
In addition, the High Court also ruled on a case involving California’s Proposition 8, the state’s same-sex marriage ban. It said that supporters of the ban didn’t have legal standing to appeal a lower court’s ruling that struck down the ban.
This will more than likely open the door to legalized same-sex marriage in California, although the losing party has a few weeks to petition the courts over the verdict.
Is same-sex marriage now legal?
As for all of those now claiming that the DOMA ruling legalizes same-sex marriage in the U.S. … pump the brakes. That’s not exactly what it does.
In a nutshell, the ruling basically means that the federal government will recognize — and treat — same-sex marriages in states that recognize such marriages as being equal to opposite-sex marriages.
In other words, if a same-sex couple is married and living in one of the 12 states (plus the District of Columbia and most likely California) that have legalized same-sex marriage — Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington — the federal government will grant those couples access to the more than 1,000 federal benefits and tax rights bestowed upon legally married couples.
This, of course, means changes for benefits pros in the states mentioned above when it comes to the administration of the following laws:
- Family Medical Leave Act (FMLA)
- Consolidated Omnibus Budget Reconciliation Act (COBRA)
- Employee Retirement Income Security Act (ERISA), and
- Health Information Portability and Accountability Act (HIPAA).
The Supreme Court’s tossing of DOMA essentially overturns the federal definition of “spouse.” So state law will now be what employers turn to for the administration of their benefits plans.
The four areas that are expected to be impacted in the states that have legalized same-sex marriage:
1. FMLA coverage
The FMLA entitles eligible employees to job-protected unpaid time off to care for a seriously ill family member — like a spouse. But traditionally, that coverage hasn’t applied to same-sex spouses. That’s expected to change — at least in the states that recognize same-sex marriages.
So prepare to update your policies accordingly.
2. COBRA coverage
Until now, same-sex spouses also haven’t had a legally-protected right to obtain COBRA benefits — although there’s nothing stopping group health plans from extending COBRA-like benefits to same-sex spouses.
But now that DOMA has been struck down, a same-sex spouse may become entitled to COBRA eligibility — again, depending on how your state views same-sex marriage.
3. ERISA plans
There are several ways the Supreme Court’s ruling is expected to impact ERISA plans in states where same-sex marriage is legal:
- The tax treatment of health benefits of same-sex couples is expected to become relatively straightforward. Traditionally, health benefits provided to a same-sex spouse have been taxable. But now that DOMA has been tossed, that’s likely to change.
- The reimbursement of expenses incurred by a same-sex spouse under a flexible spending arrangement (FSA), health reimbursement arrangement (HRA) or health savings account (HSA) are no longer expected to be taxable.
- When it comes to retirement plans, now that the feds’ definition of “spouse” has been wiped out, it stands to reason that same-sex spouses would be entitled to the same spousal rights as opposite-sex spouses. This is bound to have a significant impact on areas such as survivor benefits and hardship withdrawals.
4. HIPAA rules
Now that same-sex marriage is recognized at the federal level, it would appear likely that all HIPAA special enrollment rights for opposite-sex married couples should also be offered to same-sex married couples — again, assuming the state you’re in recognizes same-sex marriages.
Traditionally, the only way same-sex spouses were extended special enrollment rights was if they were covered by a plan’s definition of “dependent.”
A final reminder
One thing to keep in mind that you may have to point out to employees: If you’re not in a state that recognizes same-sex marriage, your plans and obligations won’t change much — if at all.
(This article originally appeared on our sister site HR Benefits Alert.)