The Supreme Court's decision last week in Obergefell v. Hodges, which legalized gay marriage, is a follow-on to its decision in 2013 in United States v. Windsor. In Windsor, the Supreme Court struck down as unconstitutional the Defense of Marriage Act's prohibition against the recognition of same-sex marriage, the effect of which was that employers are required to treat spouses in same-sex marriages as married for all federal law requirements. For employee benefit plans, these requirements include the availability of COBRA coverage and the right of a spouse of a participant in a 401(k) or other employer-sponsored retirement plan to receive the participant's benefits under the plan upon the death of the participant.
The new Supreme Court decision will not have additional broad employee benefit plan ramifications for most employers. There are, however, a couple of considerations worth noting.
- Employers doing business in states
where, because of litigation, the legal status of same-sex marriage
ceremonies performed in the state was unclear (most notably,
Alabama), were faced with uncertainty as to whether the spouses in
those marriages were entitled to spousal benefits under the
employer's employee benefit plans. The uniformity created by
the Supreme Court's decision eliminates that confusion.
- Employers in states that did not recognize same-sex marriages have often provided health benefits to the domestic partners of employees, and grossed up the tax cost to the employees of that coverage, which is not eligible for the tax exclusion applicable to health plan coverage provided to the spouse and dependents of an employee. In light of the Supreme Court's ruling that all states must recognize same-sex marriages, the need for domestic partner coverage for same sex domestic partners and the related tax gross up will typically no longer exist.
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