Agencies Issue Guidance on Same-Sex Marriages and Employee Benefits

Originally posted by United Benefit Advisors

Details continue to emerge on how the federal government will implement the decision of the U.S. Supreme Court that part of the Defense of Marriage Act (DOMA) is unconstitutional. On Sept. 18, 2013, the Department of Labor’s Employee Benefit Security Administration (EBSA) issued Technical Release 2013-04. With this release, the EBSA has joined the IRS in stating that, for purposes of federal tax and federal employee benefit requirements:

  • The “place of celebration” rule will apply. This means that if the employee was legally married in any state or country, for federal tax and federal benefits purposes only the person will be considered legally married even if the employee is currently living, or the employer is located, in a state that does not recognize same-sex marriages. (These notices do not mean that a health plan must now cover a same-sex spouse.)
  • The agencies only recognize actual marriages of same-sex spouses. This means that an employee who is in a civil union or domestic partnership is not covered by these new rules.
It is helpful to employers that the EBSA and the IRS are taking the same approach, since those agencies are jointly responsible for administering many benefits issues, such as COBRA, HIPAA, and qualified plans. There continue to be many areas of uncertainty, however, particularly since some areas are governed by state law and other areas are governed by federal law. Employers are encouraged to discuss their particular situation with local counsel before taking action.
Federal law does not require health plans to use a particular definition of a covered spouse, so state law and the terms of the plan become critical when deciding if a same-sex spouse must or may be covered. If, for example, the plan defines “spouse” as “the employee’s lawful spouse” the plan will be obligated to cover a same-sex spouse, but not a partner in a civil union or a domestic partner. If the plan defines “spouse” as the “employee’s opposite-sex spouse” under federal law the plan does not need to cover a same-sex spouse. If the employer is located in a state that recognizes same-sex marriages, however, there may be a requirement under the state’s insurance code that same-sex spouses be covered, and the plan may need to be amended to meet that requirement. Employers should review their benefit plans to be sure that their definition of a covered spouse both is legal and reflects their intent.
Must a group health plan cover same-sex spouses?
  • If the employer’s state recognizes same-sex marriage
  • If the plan is fully insured – probably (check state insurance law and the policy’s definition of “spouse”)
  • If the plan is self-funded – maybe (check the plan’s definition of “spouse;” be aware that opinions differ on whether ERISA will preempt state law)
  • If the employer’s state does not recognize same-sex marriage
  • If the plan is fully insured – unlikely (check the policy’s definition of “spouse”)
  • If the plan is self-funded – unlikely (check the plan’s definition of “spouse”)
May a group health plan cover same-sex spouses?

  • If the employer’s state recognizes same-sex marriage
  • If the plan is fully insured – probably (check the policy’s definition of “spouse” or with the insurance carrier)
  • If the plan is self-funded – yes (check the plan’s definition of “spouse;” verify with stop loss carrier)
  • If the employer’s state does not recognize same-sex marriage
  • If the plan is fully insured – probably not (check with the insurance carrier)
  • If the plan is self-funded – yes (check the plan’s definition of “spouse;” verify with stop loss carrier)
Must a group health plan cover state-recognized civil union or domestic partners?
  • If the employer’s state recognizes civil unions or domestic partnerships
  • If the plan is fully insured – probably (check the policy’s definition of “spouse”) *
  • If the plan is self-funded – maybe (check the plan’s definition of “spouse;” be aware that opinions differ on whether ERISA will preempt state law) *
  • If the employer’s state does not recognize civil unions or domestic partnerships
  • If the plan is fully insured – probably not (check the policy’s definition of “spouse”) *
  • If the plan is self-funded – no (check the plan’s definition of “spouse”)
May a group health plan cover state-recognized civil union partners or state-registered domestic partners?
  • If the employer’s state recognizes civil union partners or state-registered domestic partners
  • If the plan is fully insured – probably (check the policy’s definition of “spouse” or with the insurance carrier) *
  • If the plan is self-funded – yes (check the plan’s definition of “spouse” and “dependent;” verify with stop loss carrier) *
  • If the employer’s state does not recognize civil union partners or state-registered domestic partners same-sex marriage
  • If the plan is fully insured – probably not (check the policy) *
  • If the plan is self-funded – yes (check the plan’s definition of “spouse” and “dependent;” verify with stop-loss carrier) *
May a group health plan voluntarily cover domestic partners?
  • If the plan is fully insured – maybe (check the policy’s definition of “spouse” and “dependent” or check with the insurance carrier) *
  • If the plan is self-funded – yes (check the plan’s definition of “spouse” and “dependent;” verify with stop loss carrier) *
Important: Although federal taxes (FICA and income) no longer apply to premiums paid for same-sex spouses, premiums to cover civil union and domestic partners are still taxable.
Should an HRA or health FSA reimburse the expenses of a same-sex spouse?
If the plan covers same-sex spouses, these expenses would reimbursable. The agencies have not issued specific rules for this situation yet. Some employers and third party administrators may prefer to wait for the rules, as both the effective date and any retroactivity are still unknown. Those that wish to act can probably do so using an effective date after June 26, 2013 (which is the date of the Supreme Court decision).
Should an HSA reimburse the expenses of a same-sex spouse?
The agencies have not issued specific rules for this situation yet, so the effective date and any retroactivity are still unknown. Using an effective date for reimbursement that is after June 26, 2013, would seem to be reasonable.
Should a covered same-sex spouse be offered COBRA and HIPAA special enrollment?
The agencies have not issued specific rules for this situation yet, so the effective date and any retroactivity are still unknown. It would seem prudent, however, to offer COBRA and special enrollment in connection with marriages occurring after Sept. 16, 2013 (a date the IRS is using for other purposes). It is unclear how those in same-sex marriages occurring prior to that date should be treated. The agencies have promised to provide additional rules. Employers that do not wish to wait should contact local counsel.
Does FMLA follow the same rules?
No. The Department of Labor’s Wage and Hour Division has issued a fact sheet stating that for FMLA purposes the law of the state in which the employee lives when FMLA is requested applies. This means that an employee who is legally married to a same-sex spouse but who moves to a state that does not recognize same-sex marriages is not entitled to FMLA to care for the same-sex spouse. (FMLA generally would be available in connection with caring for the same-sex spouse’s children – in all states – because FMLA is available to anyone helping to raise a child.)
Employers with employees in multiple states that are concerned about treating employees differently have the option to provide similar, non-FMLA leave to employees located in states that do not recognize same-sex marriages. It may be wise to consult with insurance and stop-loss carriers before implementing this type of a policy.
This article simply provides a summary of federal guidance issued to date that relates to group health plans. Additional rules and details are expected from the government agencies. This article does not address state issues (including state taxation of premiums, which may be an issue in a few states), the risk of lawsuits or the impact of this decision on qualified plans. Employers are encouraged to watch for additional developments and to consult with their attorneys to obtain assistance applicable to their specific situation.
State

Allows same-sex marriage?

Recognizes same-sex
marriage performed in another state?

Alabama

No

No

Alaska

No

No

Arizona

No

No

Arkansas

No

Yes

California

Yes

Yes

Colorado

No, but recognize civil unions

No

Connecticut

Yes

Yes

Delaware

Yes

Yes

Dist. of Columbia

Yes

Yes

Florida

No

No

Georgia

No

No

Hawaii

No, but recognizes civil unions

Unclear

Idaho

No

No

Illinois

No, but recognize as civil uions

Recognize as civil unions

Indiana

No

No

Iowa

Yes

Yes

Kansas

No

No

Kentucky

No

No

Louisiana

No

No

Maine

Yes

Yes

Maryland

Yes

Yes

Massachusetts

Yes

Unclear

Michigan

No

No

Minnesota

Yes

Yes

Mississippi

No

No

Missouri

No

No

Montana

No

No

Nebraska

No

No

Nevada

No, but recognize domestic partnerships

Unclear

New Hampshire

Yes

Yes

New Jersey

No, but recognize as civil unions

Recognize as civil unions

New Mexico

No

Unclear

New York

Yes

Yes

North Carolina

No

No

North Dakota

No

No

Ohio

No

No

Oklahoma

No

No

Oregon

No, but recognize domestic partnerships

Unclear

Pennsylvania

No

No

Rhode Island

Yes

Yes

South Carolina

No

No

South Dakota

No

No

Tennessee

No

No

Texas

No

No

Utah

No

No

Vermont

Yes

Yes

Virginia

No

No

Washington

Yes

Yes

West Virginia

No

No

Wisconsin

No, but provide some domestic
partner rights

No

Wyoming

No

Yes

The EBSA Technical Release may be accessed at http://www.dol.gov/ebsa/newsroom/tr13-04.html.

The IRS Revenue Ruling may be accessed at http://www.irs.gov/pub/irs-drop/rr-13-17.pdf.
The Wage and Hour Fact Sheet may be accessed athttp://www.dol.gov/whd/regs/compliance/whdfs28f.pdf.
9/25/2013