Employers are looking for help after the U.S. Supreme Court’s decision in United States v. Windsor, which found unconstitutional Section 3 of the Defense of Marriage Act (DOMA). The act had prohibited the federal government from acknowledging same-sex marriages, which are recognized as legal by 13 states and the District of Columbia.
“In the aftermath of the U.S. Supreme Court’s decision to strike down key provisions of the Defense of Marriage Act (DOMA), employers who sponsor health and retirement benefit plans for workers and their spouses are in urgent need of guidance indicating how to comply with federal law,” wrote the American Benefits Council in a July 17 letter to the Obama administration. The council represents U.S. employers that sponsor benefit plans.
The letter, which was sent to the U.S. Departments of Treasury, Labor, and Health and Human Services, as well as the Internal Revenue Service, requests interim guidance on the ruling or transition relief.
“The threshold question is who a plan should treat as a spouse under applicable federal [tax and benefit] law,” the letter states.
Much of the uncertainty stems from the fact that existing law is unclear as to whether, for purposes of the federal laws governing employer-sponsored benefits, a “spouse” refers only to an employee’s same-sex spouse who resides in a state that recognizes same-sex marriage or whether this term includes a same-sex spouse subject to a valid marriage license, regardless of where that spouse lives. “Any rule that is adopted must allow for the uniform administration of plans at the federal level,” the letter reads.
‘State of Celebration’ or ‘State of Domicile’?
To address this matter with respect to the administration of plans and benefits across state lines, the council said it supports a rule that determines marriage by the “state of celebration” (i.e., whether an individual holds a valid state marriage license), rather than by the laws applicable to the individual’s current state of residence. A “state of domicile” rule “would be much more difficult and expensive for benefit plans to administer,” the council notes in the letter.
In addition, the letter identifies several other relevant issues that require clarification, such as:
- Whether the change in law could require an employer to provide retroactive benefits or re-administer benefits previously provided under the terms of a plan.
- The need for more time for plans to comply with the new legal and regulatory landscape.
- The treatment of employer-provided health coverage as imputed income.
- The ability of affected workers and employers alike to seek refunds of federal income or payroll taxes paid for health coverage of a same-sex spouse.
After the Windsor decision the council applauded the court’s ruling but acknowledged the new challenges facing employers—particularly large, multistate companies that sponsor employee benefits—in light of the varying state laws regarding same-sex couples.
“The court’s rejection of DOMA freed employers from numerous financial and administrative burdens but created innumerable other questions that require prompt answers,” James A. Klein, president of the council, commented. “We urge the federal agencies to issue guidance as soon as possible.”
District Courts Rule in Ohio and Pennsylvania Cases
In a sign of other litigation that is sure to escalate in states that do not recognize same-sex marriages, on July 22 the U.S. district court for the southern district of Ohio (western division), in Obergefell vs. Kasich, ordered state officials to recognize the unions of same-sex couples who were married in other states but live in Ohio, a state that does not recognize same-sex marriages under its own laws, reports SCOTUSblog.
In another post-Windsor ruling, on July 29 the U.S. district court for the eastern district of Pennsylvania, in Cozen O’Connor v. Tobits, ruled that a same-sex spouse was entitled to death benefits from a Pennsylvania-based employer's ERISA profit-sharing plan(Pennsylvania does not recognize same-sex marriages), reports an alert from law firm Seyfarth Shaw.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Related SHRM Articles:
Now What? Employer Benefits Obligations Post-DOMA, SHRM Online Benefits, July 2013
Benefits Professionals Wait and See How DOMA Ruling Will Play Out, SHRM Online Legal Issues, July 2013
DOMA Ruling Will Change FMLA Administration, SHRM Online Legal Issues, July 2013
DOMA Decision Will Transform Immigration Law, SHRM Online Legal Issues, July 2013
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