DOMA Ruling Causes Significant Benefit-Related Challenges, Uncertainty for Employers

Author: Tracy Morley, XpertHR Legal Editor

July 2, 2013

The Supreme Court's ruling striking down Section 3 of the Defense of Marriage Act (DOMA) raises significant issues related to the administration of employee benefit plans. As a result of the Court's ruling, if a legally married couple lives in a state where same-sex marriage is recognized, same-sex partners are now recognized as spouses and eligible for federal benefits and protections linked to marital status.

However, the Court's ruling poses some challenges for employers and leaves many questions unanswered, including whether the ruling will be applied on a prospective or retroactive basis. In addition, it remains unclear if an employer in a state that does not recognize same-sex marriage will be required to do so for benefit plan purposes.

While additional guidance is expected, employers should begin reviewing their plan documents and administrative procedures to determine what changes may be required.

Below are some examples of how the Court's ruling may affect employee benefit plans in states that recognize same-sex marriage.

Health and Welfare Benefit Plans

  • Employers will not have to impute income on the value of employer-sponsored coverage for same-sex spouses.
  • Continuation coverage under COBRA should be offered to same-sex spouses.
  • Employees may be eligible for reimbursement for expenses incurred by same-sex spouses under flexible spending, health reimbursement and health savings accounts.
  • Same-sex spouses will be eligible for special enrollment rights under the Health Insurance Portability and Accountability Act.
  • Marriage of same-sex spouses may be considered a qualifying event under the cafeteria plan rules.

Retirement Benefit Plans

  • Same-sex spouses will be eligible for survivor benefits under an employer's pension plan.
  • Qualified Domestic Relations Orders involving same-sex spouses will be valid and may entitle former same-sex spouses to retirement benefits.
  • Surviving same-sex spouses can delay retirement benefits until April 1 of the year following the year in which the deceased same-sex spouse would have reached age 70 ½.
  • Hardship withdrawals for expenses related to a same-sex spouse will be treated the same as those for an opposite-sex spouse.
  • Same-sex spouses should have spousal consent rights for the purposes of loans from a plan and designating a non-spouse beneficiary.

In addition to the above, an employee in a same-sex marriage is now entitled to leave under the Family and Medical Leave Act in order to care for his or her spouse.