Canada: U.S. Employee Benefit Plans Must Comply With Supreme Court’s DOMA Decision: What To Do Now And What Is Still Undecided

When the United States Supreme Court struck down the Defense of Marriage Act (DOMA) provision defining marriage under federal law as between a man and a woman, the decision had broad implications for U.S. employee benefit plans of all kinds. The Supreme Court was silent on the retroactive impact of its decision and whether there should be a transition period for compliance; however, some issues affecting current benefits appear to require immediate attention, as the decision becomes final on July 21.

Below we highlight some of the ways in which the invalidation of this section of DOMA affects plan administration and the taxation of plan benefits.

Which Marriages Must Be Recognized?

The Supreme Court ruled that the federal government could not deny equal treatment to same-sex spouses whose unions were recognized under state law. It did not find a constitutional right to same-sex marriage that must be recognized throughout the United States. Therefore, the starting point for a plan that has not voluntarily provided benefits to same-sex- spouses – and many U.S. plans have not – is to determine whether the participant was married in one of the 13 states (now including California) or the District of Columbia that recognize same-sex marriage. If not, the plan must determine whether the participant was legally married in a country such as Canada or the Netherlands that legally recognizes same-sex marriage. The court's decision did not discuss civil unions, such as those recognized in New Jersey.

If the spouses were married in and reside in a state such as Massachusetts that permits same-sex marriages, that may be all the inquiry necessary. However, if they were married in a state where they do not live now, whether they are treated as married for purposes of the Employee Retirement Income Security Act (ERISA) or the related provisions of the Internal Revenue Code may depend on whether the state where they now reside recognizes same-sex marriages performed elsewhere.

The Supreme Court did not invalidate another provision of DOMA that was not before it and does not require states to recognize these marriages performed in other jurisdictions, but some states do. For example, Edith Windsor, the plaintiff in the DOMA case, was married in Canada, and New York recognized her marriage. On the other hand, Florida passed a law prohibiting any recognition of same-sex marriages.

The Internal Revenue Service (IRS) and other federal agencies will have to determine which laws apply in this situation. The IRS typically looks to state law, but might take the position that valid same-sex marriages will be recognized for federal tax purposes no matter where performed. Pending future guidance on this point, plans may wish to consult their legal counsel if they are unsure how to handle situations in which the spouses were not married in the state or country where they now reside.

What About Domestic Partnerships and Civil Unions?

Nothing in the decision grants any new rights to this group. Providing benefits to partners in domestic partnerships and civil unions generally continues to be optional. However, state insurance laws may require their coverage in insured welfare plans.

Which Plan Practices Are Affected?

State insurance laws governing health and life insurance plans (which, unlike laws affecting pension plans and self-funded welfare plans, are generally not preempted by ERISA) may provide the applicable definition of "spouse" for those plans.  In states where same-sex marriage is legal, these laws should define spouse consistently with state marriage law. Other state insurance laws may not mandate or permit these insurance benefits to be provided to same-sex spouses or partners in civil unions. This may be an area of future litigation.

Pension plans subject to the benefit requirements of ERISA and tax-qualified plans must now provide qualified joint and survivor annuities and pre-retirement survivor annuities to same-sex spouses. Same-sex- spouses may also be entitled to more valuable benefits because joint and survivor benefits are often subsidized. Plans that do not provide annuities – such as many 401(k) plans – must require the consent of a same-sex spouse before a participant can elect a non-spouse beneficiary.  Plans will be required to recognize qualified domestic relations orders (QDROs) if same-sex spouses divorce.

ERISA-covered welfare and cafeteria plans providing spousal coverage will generally be required to permit same-sex spouses to elect family coverage, and Affordable Care Act (Obamacare) requirements will be applied by recognizing same-sex marriages. These plans must also permit special enrollment and mid-year changes in coverage when one of the relevant life events listed in HIPAA occurs, such as same-sex marriage, death of a same-sex spouse, etc. And a major change will occur in the taxation of health plan and cafeteria plan participation, where same-sex spouses who participate in the plan have previously been taxed on the value of coverage provided to a non-dependent same-sex spouse. Such coverage will now be provided on a pre-tax or non-taxable basis.

A further major change in the welfare benefit area is that same-sex spouses who were covered under a health plan will now be entitled to health plan continuation coverage (COBRA) when their spouse loses coverage – for example, by being laid off.

There are other provisions that will be affected. This Update highlights only some of the most significant.

Plan Amendments

Plans that currently define "spouse" as a person of the opposite sex will need to be amended. A plan that defines spouse by reference to DOMA should similarly be changed. However, a plan that makes a general reference to federal law may not require an amendment, so counsel should be consulted about required changes. Employers should also consider getting new beneficiary designations from employees in same-sex marriages, even if the plan is not specifically amended to provide for it.

Retroactive Claims

While it seems clear that compliance is required going forward, since the Supreme Court found that the relevant DOMA section was always invalid, there may be retroactive claims from employees who were denied benefits in the past or are currently receiving other forms of payment. For example, defined benefit plans are not required to provide pre-retirement or post-retirement death benefits for unmarried participants, so, for example, same-sex widows or widowers might now claim that they should receive retroactive lump sums or survivor annuities.

We do not yet know whether retroactive compliance will be required, or, if it is, how far back to go. We hope that guidance applicable to private employer plans will be issued soon. A memorandum has already been issued by the U.S. Office of Personnel Management giving employees and annuitants under federal government plans 60 days from June 26 (the date of the Supreme Court decision) to make immediate changes to their health plan enrollment and giving all retirees in same-sex marriages two years from June 26 to elect any changes to their federal retirement benefit based on marital status.

There seems to be no clear requirement at this time for private employers to permit employees already in pay status to change the form of payment of their pensions as federal employees will be permitted to do. This, in fact, could be viewed as prohibited under regulations on required minimum distributions. For this kind of retroactive change, a wait-and-see-approach would be the most appropriate at this time.

There does, however, appear to be a clear opportunity to claim refunds of taxes improperly paid in the past. Employees who were taxed on their cafeteria and flexible benefit plan participation may file for refunds, so employers could be required to issue corrected forms W-2. Employers may also wish to file for refunds of FICA paid based on same-sex spouse participation in such plans.

The Canadian Experience  

Same-sex marriage all across Canada has been recognized for eight years now and legislation started being amended several years before that to recognize same-sex partnerships, including pension standards legislation. In the wake of the recent U.S. Supreme Court case, Canadian companies with U.S. operations will need to turn their minds to these issues once again.

If the Canadian experience is any indication, we would expect further litigation over effective dates and implementation. For example, the 2007 decision of the Supreme Court of Canada in Canada (Attorney General) v. Hislop considered the constitutionality of the federal legislative response to its 1999 decision striking down the restrictive definition of "spouse" in the Family Law Act (Ontario). In Hislop, certain Canada Pension Plan restrictions on same-sex survivor benefits were found to be unconstitutional. Nevertheless, the Court did not grant full retroactivity of benefits to 1985, when section 15(1) (the equality rights section) of the Charter of Rights and Freedoms came into effect. 

Future Guidance

Given the number of open questions and the speed with which the federal government is moving to change its own benefits, compliance guidance for private employers is sorely needed. A threshold issue of major importance is whether to look at the law of the state in which the couple lives or the state or country in which the marriage was performed to determine whether a same-sex marriage is valid. Another threshold issue is when conforming amendments will be required to be adopted. Plan sponsors need to keep abreast of all new authority in this area.

Compliance Action Plan

Plan sponsors also need to coordinate with their legal counsel regarding plan document changes and with their recordkeepers, administrators and payroll providers to correctly implement the compliance practices that they adopt. Finally, they will also need to clearly communicate with employees to notify them of plan changes.

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

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions