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  70 West Madison St.
  Suite 1500
  Chicago, Illinois 60602
  (312) 696-1373

  aswilliams@GCT.law 

 

 

 

Same-Sex Marriage and Your Benefit Plans?

The U.S. Supreme Court recently ruled that the Fourteenth Amendment requires all states to license marriage between two qualified individuals of the same-sex and to recognize the validity of same-sex marriages performed in other states (that’s the Obergefell v. Hodges decision). This decision not only extends the right of same-sex couples to marry in all 50 states, but also assures the following rights to same-sex married couples under state law: the right to file joint state income tax returns, community property rights in community property states, the right to inherit property more easily, the same hospital visitation rights afforded opposite-sex married couples and full spousal benefits under Social Security, Medicare and veterans’ pension and medical care programs (these arrangements incorporate state law definitions of marriage for benefit purposes).

In the 36 states and the District of Columbia that, like Illinois, previously recognized the validity of same-sex marriages, the impact on employers and their benefit plans may not be dramatic. In fact, employers with employees in a number of different states may find that the Obergefell decision simplifies benefits administration by providing uniformity among the states in which they conduct business operations. However, open issues for future court decisions include the nature of any exceptions to be granted to religious institutions. For example, will there be an exception similar to the Hobby Lobby case, where the Supreme Court recognized a business owner’s religious beliefs by allowing a limited exception to the coverage requirements of the Affordable Care Act? Will faith-based universities be required to provide married housing for same-sex married couples? 

More immediate concerns are also presented: 

  • When does the Obergefell holding apply? Will the Supreme Court’s recognition of this “fundamental right” be subject to any time limitation while states and private employers implement responsive changes? Probably not based on this statement in the Obergefell opinion: 

The dynamic of our constitutional system is that individuals need not await legislative action before asserting a fundamental right. The Nation’s courts are open to injured individuals who come to them to vindicate their own direct, personal stake in our basic charter. An individual can invoke a right to constitutional protection when he or she is harmed, even if the broader public disagrees and even if the legislature refuses to act. 

  • Employers that previously afforded same-sex couples benefit rights as unmarried domestic partners or parties to a civil union need to consider how to treat those unmarried couples after Obergefell. Will the employer continue to treat unmarried same-sex partners in a civil union just like same-sex married couples? Or will the employer require same-sex domestic partners to marry in order to have the same benefit rights as opposite-sex couples?

 

  • Employers in states that did not recognize same-sex marriage may have to adjust to new rules on the taxation of group health benefits. Previously, the cost of group health benefits extended to same-sex partners in such states was taxable income under state law. The Obergefell decision will extend the right to such couples to marry and attain the same exclusion from income of the cost of group health coverage that is afforded to opposite-sex couples under state law. 

Recommendations: Employers who currently offer benefit coverage only to opposite-sex spouses should extend that coverage to same-sex spouses. Affected employers should respond to Obergefell as quickly as possible. Benefit related documents and communications should be reworded to eliminate any restrictive definitions of marriage or the use of opposite-sex terminology such as “husband” and “wife.” If this cannot be done right away, consider circulating a general notice to employees advising that the rights of same-sex married couples will be observed in the administration of your employee benefit plans as required by law.

 

Andrew S. Williams
Golan Christie Taglia LLP
70 West Madison St.
Suite 1500
Chicago, Illinois 60602
(312) 696-1373
aswilliams@GCT.law

 

   
Copyright © 2017 Andrew S. Williams. All rights reserved.