Now that same sex marriage is recognized in 19 states, and imminent in the other 31, employers are finding they have to revise their benefit plans and policies to comply. Since the U.S. vs Windsor ruling last year, those fighting for same sex equality laws have been winning almost every court case.
The Windsor ruling did away with federal law that limited the terms “spouse” and “marriage” to only heterosexual partners. Even though the ruling has no say in what a state can decide, it’s set a precedent. It’s expected that states that do not currently recognize same sex marriage will soon follow suit.
The laws change on a daily basis and employers must keep up with these changes. If you are an employer, make sure to update your benefit plans and other documents to remain compliant.
This includes qualified retirement plans such as a 401 (k), profit sharing plans and pensions.
All qualified plans must treat anyone who is officially married, no matter what their sexual orientation, like any other employee. This encompasses spousal consent in order for a participant to receive distributions, or qualify for loans in the event of financial hardship. Other considerations that involve same sex marriage are rollovers, beneficiary designations, and minimum distribution provisions.
According to the IRS, qualified plans must be administered and be incompliance with the Windsor ruling from the date it was decided on June 26, 2013.
Employers will want to update plan definitions and all written procedures making sure they are retroactive to June 26, 2013. The IRS requires that all changes need to be made no later than December 31, 2014.
Payroll systems are another item that needs to be updated. Before Windsor, employees in a same sex partnership paid federal taxes on the cost of same sex benefits provided by their partners even if they were officially married. After Windsor, benefits are provided pre-tax. Refunds may be available to employees and employers as a result of the Windsor ruling. Check with your tax preparer.
States that follow the federal law are now pre-tax, while other states, affected by Windsor have still not decided. If you live in a state that has decided not to piggyback on Federal law, you will need to bifurcate state and federal withholding and imputed income. It’s best to check with state agencies to make sure you are in compliance.
Welfare programs including group health, dental, vision, life insurance, AD&D coverage, cafeteria plans, health reimbursement accounts, flexible spending and health savings account employers must treat same sex spouses equally. The same applies to HIPAA special enrollment rights and COBRA.
Federal law, which includes the Affordable Care Act doesn’t require coverage of spouses in group health plans, and this may be confusing to employers. Many employers have adopted an across the board policy allowing partners to participate to avoid confusion or employee unrest.
Employees in same sex partnerships who were married in states that recognize the marriage, are considered valid by the Family and Medical Leave Act (FMLA) regardless of residency.
Then enters the issue of domestic partners, or those who signed domestic partnership affidavits, and who are not legally married. They are treated like they are married for some purposes; however, they still do not have the same rights as spouses even after the Windsor ruling. Although employers may have previously offered them benefit plans pre-Windsor, they are still treated as unmarried according to the law.