As of May 2010, five U.S. states and the District of Columbia provided marriage licenses to same-sex couples, compared to just one state in 2004. An additional two states recognize same-sex marriages from other states. [In June 2011, New York became the sixth and largest state to grant marriage licenses to same-sex couples.]
As a result of these changes, employers should be mindful of their benefit plan documents and the way in which they define terms such as spouse and domestic partner, according to the Human Rights Campaign (HRC), an advocacy group for lesbian, gay, bisexual and transgender people.
Health Plan Issues
Employees with fully insured health plans subject to state insurance regulations, and which are based in states that recognize same-sex marriages, generally will be required to provide benefits to same-sex spouses if they provide benefits to opposite-sex spouses, according to HRC. But employers with plans spanning multiple states, particularly self-insured plans subject only to federal oversight under the Employee Retirement Income Security Act (ERISA), might not be required to provide benefits to same-sex spouses.
Largely as a result of the federal Defense of Marriage Act, passed in 2006, state law definitions of spouse and marriage might not always be given effect in connection with employee benefit documentation, according to HRC. Nonetheless, the group states that "federal laws, including ERISA, do not prohibit any employer from affirmatively drafting plan documents to recognize same-sex spouses for most benefits."
Sample Language for Plan Amendments
According to the group, "For years, employers could provide spousal-equivalent benefits to same-sex partners through a domestic partner benefits program—this typically involves employers having to make only one plan amendment that adds partners as eligible dependents for benefits. In light of the changes to state law definitions of spouse, and the likelihood that such changes will continue to occur in the future, employers can and should review their existing benefit plan documents to ensure that benefits are fully available to same-sex spouses and partners." This entails amending the definition of "spouse" in plan documents.
HRC's Spousal Benefits resource page, launched in May 2010, provides examples of plan definitions that it says will allow same-sex spouses to participate in spousal benefits:
Does not reference same-sex spouses expressly but might include them:
"Spouse: Your spouse is your legally married spouse as recognized under applicable state law."
HRC comments: "This definition makes clear that the plan does not follow a federal definition of spouse (which would be limited by federal Defense of Marriage Act). It does not clarify what state laws will apply—those of the employee's state of residence, state of employment or state of marriage certificate—but the definition would generally include most same-sex spouses for employees working in a state that recognizes [same-sex marriages]."
References same-sex spouses expressly with respect to state-recognized marriages only:
"Spouse: Your opposite-sex or same-sex spouse as determined under applicable state law at the time and location that the marriage was entered into."
HRC comments: "This definition makes clear the applicable state laws, although it does not recognize marriages entered into in a different country, which could particularly affect employers that work with international employees."
References same-sex spouses expressly, including state or extranational marriages or comparable relationships:
"Spouse: A spouse of the opposite sex to whom you are legally married under the laws of a state or nation (excluding common-law marriage); or a person of the same sex with whom you have entered into a marriage, civil union, or comparable relationship in a state or nation that sanctions such unions by law and that is valid pursuant to such law at the time that the parties enter into the relationship and such relationship has not been dissolved under the law of the state or nation in which such relationship was initially or is currently recognized."
HRC comments: "This definition makes clear that legal same-sex relationships such as civil unions [and] domestic partnerships will also be recognized for the purpose of benefits, as well as marriages entered into in a different country."
In addition to providing coverage to same-sex spouses, employers should be mindful of the state and federal tax treatment that can relate to such coverage. Unlike opposite-sex spouses, same-sex spouses and partners are subject to federal income tax for the imputed, estimated value of the employer's contribution toward health benefits, so employers should ensure that their payroll systems are equipped to handle this distinction. However, state income tax on the imputed value of the health benefits often is not required in those states that recognize same-sex marriages.
Employers should require the same documentation for same-sex spouses as for opposite-sex spouses, HRC advises. For example, same-sex spouses should not be required to provide a marriage certificate if opposite-sex spouses are not required to do so for enrollment or audit purposes.
Equal documentation requirements for enrollment are required by law in some states that recognize same-sex marriages and by some states that recognize registered domestic partnerships or civil unions.
Stephen Miller is an online editor/manager for SHRM.
New York Marriage Law Impacts Benefits, SHRM Online Benefits Discipline, July 2011
Equal Benefits Gain Ground, HR Magazine, June 2011
Barclays to Reimburse U.S. Workers for Taxes on Domestic Partner Benefits, SHRM Online Benefits Discipline, October 2010
Best-Practice Benefits for Same-Sex Couples, SHRM Online Benefits Discipline, July 2010
Quick Link:SHRM Online Benefits Discipline