When you heard about the invalidation of the part of the Defense
of Marriage Act (DOMA) that defined marriage as between a man and a
woman by the United States Supreme Court, you probably
thought: "Now my plan is going to have to provide joint and
survivor benefits to same sex spouses." That is true, but it
is only one of the many plan provisions, tax benefits and plan
practices impacted by the U.S. Supreme Court's decision.
While the Court's decision leaves many compliance questions
unanswered, every plan sponsor will want to start by reviewing its
plan definition of "spouse" to see if it needs to be
amended. For example, we sometimes see plan provisions that
explicitly define "spouse" as a person of the opposite
sex to whom a participant is legally married. Obviously, this
language will need to be changed. The determination will now be
made by looking at each state's law.
Beyond joint and survivor annuities for same-sex spouses, here
are just a few of the other employee benefits you may not have
thought about that are impacted by the DOMA decision:
Plans that don't provide annuities, such as many 401(k)
plans, require spousal consent before the participant may name
another beneficiary. Same sex spouses must now provide this
Cafeteria and flexible benefit plans must permit mid-year
election changes when participants marry a same sex spouse or when
a same sex spouse loses coverage.
COBRA (health plan continuation) coverage must be offered to
same sex spouses.
Same sex spouses must be given the same rights to defer payment
of death benefits and make rollovers as opposite sex spouses.
The federal tax treatment of same sex spouses is also
changed. An employee will no longer be taxed on the value
of employer-provided health coverage for a same sex spouse who is
not the employee's tax dependent, and employee premiums for
this coverage may now be paid on a pre-tax basis. Employers will
need to change their payroll withholding.
Future plan administration must change. It is
unclear at this time whether past practices will have to be
corrected or how far back claims can go. But we fully expect that
same sex spouses will make claims for past benefits, as well as
prospective benefits. We can envision, for example, same sex
spouses claiming that they are entitled to retroactive survivor
annuity benefits. Will these be required? Will employers have to
issue revised W-2s? Will prior beneficiary designations be
The answers will depend on future guidance, which will determine
how expensive and complicated compliance will be.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).