Same-sex marriage ruling affects employee benefit plans

The U.S. Supreme Court’s decision striking down the federal Defense of Marriage Act will have a significant effect on employee benefit plans.

The federal law had refused to recognize same-sex marriages for purposes of federal taxes and other requirements. The Supreme Court said this law was unconstitutional, which means that same-sex couples who are married under state law now have to be treated as married under federal law.

Among other things, it now appears that:

  • Employees with a 401(k) or similar retirement plan will have to name a same-sex spouse as the primary beneficiary, unless the spouse waives this right.
  • Pension plans that offer “surviving spouse” annuities or “joint and survivor” annuities will have to include same-sex spouses.
  • If an employee with a same-sex spouse gets a divorce, the other spouse may be able to get a court order authorizing payments from the employee’s retirement plan.
  • If a worker is covered by a health insurance plan, the worker’s same-sex spouse will be entitled to COBRA rights.
  • Income tax rules may change for employees with same-sex spouses with regard to family health insurance payments, flexible spending accounts, and high-deductible health care plans and health savings accounts.

It’s still unclear whether the law will apply to prior tax years as opposed to future tax years, and it’s also unclear what will happen if an employee who has a same-sex marriage that was validly performed in another state works in a state that doesn’t recognize such a marriage. If you have any questions, you may want to consult your lawyer to see how this ruling will affect you or your company.