Know the Law: How benefits change for same-sex couples if marriage act is overturned
Q: Several of my New Hampshire employees have same-sex spouses. If the U.S. Supreme Court overturns the Defense of Marriage Act (DOMA), how will that change their benefits structure?
A: DOMA defines "marriage" as a "legal union between one man and one woman as husband and wife," and "spouse" as a "person of the opposite sex who is a husband or a wife." If DOMA is overturned, the federal government will be unable to treat individuals differently with regard to certain benefits based on the gender of their spouse. This will trigger significant policy and benefit changes for employers.
-- Health insurance: Employer-provided family health insurance benefits are non-taxable fringe benefits and exempt from income tax liability. Under DOMA, benefits provided to domestic partners or same-sex spouses are not exempt from tax liability, and are instead imputed to the employee as income. If DOMA is overturned, health insurance benefits provided to same-sex spouses will no longer be imputed as income, and will instead be exempt from tax liability.
-- Title VII of the Civil Rights Act: While New Hampshire recognizes sexual orientation as a protected class, the Civil Rights Act does not. It does, however, prohibit discrimination based on gender. Some experts argue that if DOMA is overturned, employers could be held liable for gender discrimination if they deny benefits to employees simply because he or she has a same-sex spouse. Employers should take active steps to ensure that all existing policies and procedures provide equal treatment, benefits, and opportunities to employees regardless of the gender of their spouse.
-- Family and Medical Leave Act: Employers are not presently required to provide employees 12 weeks of unpaid leave to care for a sick same-sex spouse. If DOMA is struck down, all employees will be allowed to take leave under FMLA to care for a same-sex spouse.
-- 401(k) and 403(b) plans: Employees with same-sex spouses participating in 401(k) and 403(b) plans requiring spousal consent to name a non-spousal beneficiary are currently free to name someone other than their spouse as the beneficiary. If DOMA is overturned, these employees' spouses will gain the same protections provided to all other spouses. This raises questions regarding the status of non-spousal beneficiaries designated before DOMA was overturned. Will they stand? Will the newly-recognized same-sex-spouse automatically undo the prior designation and become the new beneficiary?
Employers should therefore encourage employees with same-sex spouses to revisit their beneficiary designations to ensure their beneficiary designations are as they intended.
Elizabeth Lahey can be reached at email@example.com.
Know the Law is a bi-weekly column sponsored by The McLane Law Firm.
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