Based upon an IRS determination which took effect last week, same-sex couples who enter into marriages in jurisdictions that recognize such marriages are now treated as married for federal tax purposes, regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage. The IRS will now allow pre-tax dollars to be used to pay premiums for same-sex spouse benefits, such as health insurance coverage.
With regard to employer-provided benefits, the IRS ruling does not confer an obligation for employers to provide spousal coverage. However, if an employer has a benefit plan which entitles spouses to certain benefits, and the term “spouse” is not defined as an opposite-sex marriage, the same-sex spouse may be covered under those plans, even if same-sex marriage is not recognized in the state where the couple resides. The IRS ruling follows upon the determination by the United States Supreme Court in U.S. v. Windsor, 133 S. Ct. 2884 (June 26, 2013) that key parts of the “Defense of Marriage Act,” unconstitutionally denied federal recognition to same-sex spouses. Other benefits, such as job-protected leave under the Family and Medical Leave Act (“FMLA”) have not yet caught up.
Under the FMLA, the definition of “spouse” depends upon state law. In August, 2013, the U.S. Department of Labor reiterated that the term “spouse” means “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.” So basically, an employee may be able to provide health insurance to his or her same-sex spouse, but not take leave if that spouse develops a serious health condition, depending upon whether their marriage is recognized in the jurisdiction where they live.
Unless and until DOL aligns with the IRS, an employer’s definition of “spouse” with regard to employee benefits may be open for interpretation. Currently there are thirteen states which recognize same-sex marriages, whether by legislation, court decision or popular vote (California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington, plus the District of Columbia). If you have employees in those jurisdictions, same-sex spouses would be entitled to leave benefits under the FMLA. For employers who have employees with same-sex spouses residing in jurisdictions where same-sex marriage may not be recognized, take a look at your policies. It is possible that any references to “spouses” or “marriages” within your employee benefit plans, including health insurance and retirement plans, may be construed to include same-sex spouses. Depending upon the size of your workforce, this impact may not be significant. However, now is a good time to review your policies and determine whether it would be appropriate to amplify the definition of spouse, such as an “opposite-sex marriage,” to ameliorate the impact of the IRS ruling where such broad coverage may not be intended, particularly in jurisdictions where same-sex marriages are not currently legally recognized.