One Year Later: DOMA’s Overturn Brings Increase in Same-Sex Benefits

Report shows employers are shifting their interpretation of ‘family’

By Stephen Miller, CEBS Jun 27, 2014

On the one-year anniversary of the Supreme Court’s June 26, 2013 ruling that overturned key provisions of the federal Defense of Marriage Act (DOMA), a new report reveals that more than 80 percent of U.S. companies are providing some benefits to couples in same-sex marriages, civil unions or domestic partnerships.

In June 2013, when asked by the International Foundation of Employee Benefit Plans (IFEBP) if their company offered any benefits to any groups of same-sex couples, 61 percent replied affirmatively; by June 2014, that number had risen to 82 percent. Responses were received from corporate HR and benefits professionals representing a range of organizations with respect to size, industry and region.

Benefits most commonly offered to same-sex partners include health care, life insurance beneficiary, employee assistance program (EAP) services, family/sick/bereavement leave and pension/retirement plan beneficiary benefits.

“We are seeing a significant shift in employers providing benefits to same-sex couples due to the Supreme Court ruling made one year ago, as well as changes in state laws which resulted from that landmark decision,” said Michael Wilson, CEO of the IFEBP, in a statement. “Some employers are making changes in order to remain compliant with the law, while others are working to create a more inclusive corporate culture through their benefit plans.”

Inclusion vs. Compliance

When employers were asked to describe their approach to same-sex benefits, the results were split fairly evenly—55 percent said they “strive to be inclusive, recognizing different types of families beyond what laws/regulations mandate.” The other 45 percent said they “simply make changes to remain compliant with laws/regulations.”

Larger employers were more likely to report a more inclusive approach.

Recognition vs. Nonrecognition States

In states recognizing same-sex marriage as legal, employers should treat both opposite-sex and same-sex couples equally, benefits attorneys point out.

Among employers operating both in states where same-sex marriage is legally recognized and in states where it is not, 80 percent said they now extend benefit rights to all married same-sex couples even if they live in a state that does not recognize or allow same-sex marriage.

Among employers that operate only in states where same-sex marriage is not legal, 32 percent now extend benefit rights to all same-sex couples, both those married elsewhere and unmarried. An additional 8 percent are considering doing so and 13 percent are awaiting further regulatory or legal guidance.

In other findings:

  • 55 percent of respondents have actively communicated legislative changes affecting same-sex benefits to their staff.
  • 39 percent have noticed an increase in HR questions/contacts from employees.

While only 1.8 percent of respondents said they will no longer provide benefits to same-sex domestic partners or those in civil unions (presumably requiring that the couples legally wed), a somewhat larger number, 12.7 percent, were undecided about ending domestic partner/civil union benefits in the post-DOMA environment.

Health Coverage: By the Numbers

The Society for Human Resource Management’s 2014 Employee Benefits report revealed that among SHRM members health care coverage was offered by:

  • 46 percent of respondents to same-sex spouses.
  • 35 percent to same-sex domestic partners.
  • 30 percent to opposite-sex domestic partners.

In contrast, the IFEBP’s survey came in with somewhat higher numbers, possibly because their sample skewed toward larger organizations, showing health insurance provided by:

  • 79 percent of respondents to legally married same-sex spouses.
  • 59 percent to same-sex domestic partners.
  • 51 percent to same-sex couples in a civil union.

(The IFEBP’s findings did not break out health benefits offered to opposite-sex domestic partners.)

Benefits Covering All Spouses

Both the IRS and the Department of Labor (DOL) have issued guidance stating they will follow a “state of celebration” rule in determining marital status with regard to qualified retirement plans. Consequently, same-sex couples married in a recognition state (or foreign country that recognizes same-sex marriages) but who now work or live in a nonrecognition state are entitled to all spousal benefits and protections provided to oposite-sex spouses under a qualifed retirement plan. This includes treatment with regard to qualified domestic relations orders (QDROs), spousal consent for loans (if required under the plan), hardship withdrawal provisions in which a participant's resources are deemed to include a spouse's assets, and other retirement plan provisions.

In addition, under federal guidance employees whose group health plans cover same-sex spouses may treat amounts paid for spousal health coverage on a pretax basis. The tax rules for flexible spending accounts (FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs) also provide for tax-free reimbursement of a same-sex spouse's qualifying expenses. Valid same-sex marriages must be recognized for other purposes as well, such as the maximum limit for deductible contributions to HSAs for families. And the same-sex spouse of a covered participant should be allowed to elect COBRA coverage.

Moreoever, the DOL issued a proposed rule changing the Family and Medical Leave Act (FMLA)'s definition of “spouse” to allow all legally married couples, whether opposite-sex or same-sex, to have consistent federal family leave rights regardless of whether the states in which they currently reside recognize their marriages.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.​

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