The U.S. Supreme Court’s recent decision extending same-sex marriage to every state will have a big effect on many employee benefit programs.
Prior to the ruling, most states (and the federal government) recognized same-sex marriage. If all of your employees live in states that previously recognized gay marriages, then no changes are required. But if any of your employees live in previously “non-marriage” states, then the ruling will make a difference.
If some of your workers live in “non-marriage” states and you previously offered benefits to same-sex spouses, then for any employees in those states who have a same-sex spouse, you’ll need to adjust their state tax withholding to the “married” rate, and you may need to adjust their withholding to reflect the fact that spousal health benefits will no longer be subject to state tax.
If some of your employees live in “non-marriage” states and you previously did not offer benefits to same-sex spouses, you may now be required to do so.
A large number of spousal benefits are mandated by federal law, and for those, you will be required to offer them to same-sex spouses. (And you’ll probably be required to offer all spousal benefits to same-sex spouses if you’re a government contractor.) It’s likely you’ll need to have the plan documents revised, and communicate the changes to employees.
As for spousal benefits that aren’t specifically mandated by federal law, it’s not entirely clear, but it’s very likely that refusing to offer them to same-sex couples would violate federal or state discrimination laws. It’s almost certainly wiser to offer the benefits than to risk a discrimination lawsuit.
A bigger question is what to do if you have previously been offering benefits to unmarried domestic partners. Many companies have been offering domestic partner benefits to help gay couples who couldn’t legally get married, and many have offered them to unmarried opposite-sex couples as well. But now that gay couples can marry in every state, a lot of companies will start rethinking whether they want to continue offering these benefits.
Domestic partner benefits can be tricky, because – unlike with marriage – there’s often no clear way to determine whether someone is in fact a domestic partner, or when a domestic partnership has ended. Domestic partner benefits also create tax complexities, because typical spousal deductions don’t apply. And companies that offer such benefits to gay couples but not straight couples could be violating discrimination laws.
Recently, many businesses have been phasing out domestic partner benefits, and the Supreme Court’s ruling will likely accelerate this trend.