Apparently, as the court now recognizes same-sex marriage through the recent ruling, the new law will definitely have far-reaching implications since the definitions of “marriage” and “spouse” affect more than a thousand federal laws, including those pertaining to retirement accounts, estate and gift taxes, Social Security benefits, family law and immigration.
Meanwhile, when it comes to the employment industry, the decision will likewise have a significant impact on the employment-sponsored benefit plans. From now on, such plans are required to recognize same-sex spouses as a spouse for all purposes under the Internal Revenue Code and Employment Retirement Income Security Act (ERISA) in states that have marriage equality.
However, along with the new law, several questions were left unanswered and created challenges for employers. Thus, expect employers to be preoccupied by these issues in the next few days or even months.
Here are some of the issues that employers must be prepared to deal with following the DOMA repeal:
For employers who provide Qualified Retirement Plans for employees:
• Is same-sex spouse now the default beneficiary for the wage earner’s account?
• Do a same-sex spouse’s medical or education needs yield an increase to a participant’s hardship withdrawal under a 401(k) plan?
• Is a former-sex spouse entitled to a portion of a wage earner’s benefits under a qualified domestic relations order (QDRO)?
• Is a surviving same-sex spouse entitled to delay required minimum distributions for a longer period of time upon the death of the wage earner?
For employers who provide Health and Welfare Benefits for employees:
• Is a same-sex spouse eligible for tax-free employer-paid health benefits?
• Is a same-sex spouse entitled to COBRA continuation coverage?
• Is a same-sex spouse entitled to special enrollment rights under HIPAA?
• Is a same-sex spouse recognized for purposes of life insurance beneficiary determination ruled or for purposes of life insurance coverage on a wage earner’s spouse?
Mainly, on top of all these questions, the biggest dispute here is whether the new law would be applied to those same-sex marriage couples who were legally married in states that have marriage equality but moved to a state that has no marriage equality; or would it only be applied to states that recognize same-sex marriage?
Consequently, for the meantime, while things remain unclear, a California employment discrimination lawyer suggests employers to review their current benefit plans and policies to assess whether they are still in compliance with the court’s recent decision and any following guidance that is issued by the federal agencies. Also, remember to include plan documents, plan policies, tax reporting systems and plan administration systems in your review, the lawyer added.