The Supreme Court decision (Windsor v. U.S.) legalizing more than 1,000 federal spousal benefits for same-sex couples will have a major impact on the administration of pensions and health plans for employers throughout the nation.
For example, the high court’s ruling overturning the benefits provisions of the Defense of Marriage Act (DOMA) means that surviving same-sex spouses under a defined-benefits retirement plan will now be entitled to receive survivor annuity payments. The decision’s expanded definition of “marriage” will require companies that offer self-funded health benefits for married spouses to extend this coverage to same-sex couples.
The sheer number of benefits under DOMA, together with variations among laws and regulations on the state level – especially in the 38 states that don’t recognize same-sex marriage – will make implementing the Windsor decision a challenge for businesses that offer spousal benefits to their workers.
To deal with this changing situation, we’d recommend that you:
- Have your attorney(s) review the benefits that you’re providing to employees’ spouses for compliance with the new requirements; ask for guidance from federal and state regulators.
- Implement the administration of new same-sex benefits (for example, amending your payroll procedures to update the federal income tax treatment of qualified benefits programs for spouses) as soon as possible – certainly by the end of this calendar year or the plan year.
- Provide complete documentation of the revisions to your plans.
- Before you communicate these changes to your employees, do your homework and be prepared to answer their questions.