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Supreme Court Ruling on DOMA – What It Means for Employers

On June 26, 2013, the U.S. Supreme Court announced its decision regarding the constitutionality of the federal Defense of Marriage Act of 1996 (DOMA). The Court struck down Section 3 of DOMA, which limited marriage to opposite sex unions for purposes of federal law.
In a 5-4 decision, the court found this definition to be a violation of equal protection rights under the U.S. Constitution, holding that same-sex couples who are legally married under state law will be entitled to equal treatment under federal law with regard to income taxes and federal benefits. However, the Court’s ruling does not establish a constitutional right to same-sex marriage.

 

The high court’s decision will impact employers in states that recognize same-sex marriage (see below) with respect to things like:
·          Taxation of employee benefits;
·          Leave under the Family and Medical Leave Act (FMLA); and
·          Enrollment rights under HIPAA and COBRA.
DOMA has not prohibited employers from providing health benefits to their employees’ domestic partners or same-sex spouses. However, the administration and taxation of these benefits can be complex. In states that recognize same-sex marriage, DOMA created two different systems for same-sex couples. Under state law, these couples were treated as married, but their marriages were not recognized under federal law.
The majority of states have laws or constitutional amendments barring same-sex marriages. However, a growing number of states have legalized same-sex marriage, while others recognize same-sex marriages performed in other states and nations. The states that have legalized same-sex marriage include:
California (due to recent Supreme Court ruling)
Connecticut
Delaware
District of Columbia
Iowa
Maine
Maryland
Massachusetts
Minnesota
New Hampshire
New York
Rhode Island
Vermont
Washington

Due to the Supreme Court’s DOMA ruling, employers in jurisdictions that allow or recognize same-sex marriage must treat employees’ same-sex and opposite-sex spouses equally for purposes of federal employee benefit laws. For example, in states that permit or recognize same-sex marriages, the Court’s decision makes the following changes with respect to employee benefits:

  1. An employer will no longer need to impute additional income to an employee who covers his or her same-sex spouse as a dependent under the employer’s health plan;
  2. An eligible employee may pay for a same-sex spouse’s health coverage on a pre-tax basis through a cafeteria (or section 125) plan in the same way as an employee with an opposite-sex spouse;
  3. An eligible employee may receive tax-free reimbursements for expenses of his or her same-spouse through a health flexible spending account (FSA), health reimbursement account (HRA) or health savings account (HSA);
  4. A same-sex spouse is considered a spouse or family member for purposes of taking leave under the federal Family and Medical Leave Act (FMLA);
  5. Special enrollment rights under HIPAA are triggered when an employee acquires a same-sex spouse; and
  6. Same-sex spouses may qualify as a “spouse” for COBRA purposes and can have their own COBRA election rights.
It is likely that federal agencies will provide more specific guidance on how the Supreme Court’s DOMA decision impacts the laws they enforce.
Importantly…the Supreme Court’s DOMA decision applies only to same-sex marriages that are valid under state law. It does not affect same-sex couples in civil unions or domestic partnerships. These couples will generally remain ineligible for the federal benefits and protections provided to spouses.

 

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