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Post-DOMA, here’s HR’s benefits to-do list

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in Compensation and Benefits,Human Resources

It will take months to sort out all the implications of the Supreme Court’s recent decision to strike down Section 3 of the Defense of Marriage Act (DOMA). But organizations with employees who are married to same-sex spouses can begin acting now to ensure their benefits plans comply with federal law.

Several federal government agencies—particularly the IRS—must still issue official guidance in the wake of the United States v. Windsor decision. (See "DOMA strike-down will ripple through HR.") In the meantime, attorneys at the Chicago employment law firm of Neal Gerber Eisenberg are encouraging employers to act now to make adjustments to their health and retirement benefits plans.

Key points: The Windsor decision only affects you if you have employees who are:

  • Legally married to a same-sex spouse
  • Live in a state where same-sex marriage is legal.

Health insurance

The Windsor decision has immediate effects on the tax treatment of same-sex spouses’ health insurance coverage. Take these steps now:

  • Stop imputing as income the value of health benefits provided to same-sex spouses.
  • Work with payroll so employees can pay health plan premiums for their same-sex spouses using pre-tax dollars.

Beyond dealing with the tax implications, the Windsor decision requires these steps by health plan administrators:

  • Extend health coverage to same-sex spouses if your plan already covers spouses. Note that no federal law requires employers to provide health insurance to spouses.
  • Grant any spousal special enrollment rights to same-sex spouses—for example, allowing enrollment upon marriage.
  • Provide COBRA coverage to same-sex spouses and the dependents of same-sex spouses if heterosexual spouses and dependents are eligible.

Retirement benefits

Work with your retirement benefits provider to ensure that these requirements can be met:

  • Under defined-benefit plans and some defined-contribution plans, surviving same-sex spouses must be protected by a qualified joint and survivor annuity or a pre-qualified preretirement survivor annuity, unless the spouse waives that right.
  • Consent must now be obtained from same-sex spouses before an employee can change beneficiaries or take out a loan from retirement accounts.
  • If a same-sex married couple is subject to a domestic-relations court order, plans must allocate retirement benefits accordingly.
  • Same-sex spouse beneficiaries must be allowed to roll over retirement benefits into an IRA or employer-plan account.
  • Plans must permit hardship distributions to pay for same-sex spouses’ medical care, tuition and funeral expenses.

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