Legally married same-sex couples now have the same federal rights as other married couples when it comes to pensions, 401(k)s, health plans and other employee benefits, even if they live in states that don’t recognize their unions, according to the U.S. Department of Labor. The new guidance means employers are not only required to treat employees’ same-sex and opposite-sex spouses equally for purposes of the benefits extended to spouses, but also comply with several key benefit provisions:
• Employers with self-insured welfare plans (meaning benefits are paid out of the organization’s general assets) may not have to extend spousal-benefit coverage to same-sex spouses, because federal law does not require spousal welfare-benefit coverage and because state insurance law mandates do not apply to self-insured plans. However, employers that continue to provide benefits coverage only to opposite-sex spouses are almost certain to face legal challenges under federal discrimination law.
• Employees will no longer have to pay federal income taxes on the income imputed for an employer’s contribution to a same-sex spouse’s medical, dental or vision coverage. And workers can pay for same-sex spouses’ coverage on a pretax basis under a Section 125 plan.
• Businesses will have to offer COBRA continuation coverage to same-sex spouses.
• Employers with pension plans will be required to recognize same-sex spouses for purposes of determining surviving-
spouse annuities. Same-sex spouses also must agree to receive payment of their deceased spouse’s pension benefits in a form other than a 50 percent joint and survivor annuity, with the same-sex spouse as the beneficiary.
• Organizations with 401(k) plans will have to recognize same-sex spouses for purposes of determining death benefits,
and same-sex spouses must consent to beneficiary designations.
• Employees must be permitted to take family and medical leave to care for an ill same-sex spouse.
Under a new IRS ruling, employees who pay for employer-provided health insurance for their same-sex spouse may treat these costs as excludable from federal income taxes, even if they live in a state that doesn’t recognize their marriage. State income taxes are another matter, however.
For more information on the state and federal tax issues affecting same-sex married couples, please see this month’s Legal Brief section. For additional questions on employee benefits, contact the Association’s HR Services Department at 814/833-3200 or 800/815-2660.
