Employee Benefits Ramifications of the U.S. Supreme Court’s Same-Sex Marriage Ruling
In a landmark case, Obergefell v. Hodges, the U.S. Supreme Court recently held that same-sex couples have a constitutional right to marry. This case expands the scope of a ruling made two years ago in U.S. v. Windsor, a case requiring federal recognition of same-sex marriage. States may no longer refuse to license a marriage between same-sex couples or refuse to recognize an out-of-state lawful marriage of a same-sex couple. Below are some, but certainly not all, of the potential implications of the Court’s recent decision.
Domestic partner health care coverage will be impacted by the Supreme Court case. Some companies offer domestic partner health care coverage only to same-sex partners. Other companies offer domestic partner health care coverage to same-sex and opposite-sex domestic partnerships. Employers who offer this benefit only to same-sex partners may be inclined to drop this coverage, as employees can now marry in all states regardless of sexual orientation. If domestic partner health care coverage is dropped, employees who otherwise may wish to keep their sexual orientation private would be faced with the Hobson’s choice of marrying their same-sex partners (thus sacrificing their privacy, since a marriage certificate is a public document) or losing spousal coverage
Another uncertain effect on employee benefits is whether the Supreme Court’s decision will lead to fewer employers offering spousal benefits. There has been a trend for employers to eliminate spousal coverage and reduce spousal benefits. By increasing the pool of spouses, the Court’s decision may accelerate this trend.
Administration of employee benefit plans will be simplified by the Supreme Court’s decision. Employers will no longer be burdened to determine whether a same-sex marriage was valid in the jurisdiction where it was entered into, as same-sex marriage is now valid in every state. State income tax treatment of employer-provided benefits also may be affected, as employees with same-sex spouses covered by an employer benefit plan will no longer have imputed income on these benefits.
Two years ago, after Windsor, employers needed to review the definition of “spouse” in various employee benefit plans. Employers now should revisit the definition of “spouse” in plan documents, insurance policies, beneficiary forms, employment policies, and other employee benefit programs.
Please contact your Much Shelist attorney if you would like assistance addressing these and other effects of the Supreme Court’s groundbreaking decision.