Benefit Plan Checklist to Address Same Sex Marriage

In light of the recent US Supreme Court decision in Obergefell v. Hodges legalizing same-sex marriage nationwide, employers should consider the following implications for benefit plans and employment policies:

  • Revisit your definition of “spouse.” Make sure the definition covers same-sex spouses in plan documents, insurance policies, trust and service agreements, beneficiary forms, required notices, and employment policies.
  • Review your eligibility rules. Fully insured and public sector self-funded health plans must offer coverage to same-sex spouses. Self-funded health plans aren’t prohibited from limiting coverage to opposite-sex spouses, but you may face litigation under federal employment discrimination law.
  • Adjust payroll and state tax reporting. Imputed income should no longer be calculated for the value of same-sex spouse health coverage. The timing of this change is unclear. However, we have seen guidance from the states of Ohio and Nebraska.
  • Reconsider domestic partner coverage. You should weigh the pros and cons of continuing to make available domestic partner coverage, given that same-sex couples now have the right to marry in all 50 states. While the complexity of tax withholding and reporting for domestic partner coverage may be an argument in favor of dropping domestic partner coverage, would this action be in keeping with your organizational culture? Would it have an impact on recruitment/retention strategies? If you do decide to end domestic partner benefits, consider carefully the end date — after which couples will essentially be required to marry or lose coverage. We recently shared employer data on domestic partner coverage now that same-sex marriage is legal everywhere.
  • Determine if you need a plan amendment. You may need a mid-year plan amendment to allow employees to enroll their same-sex spouses prospectively based on the plan’s expanded eligibility. Eliminating domestic partner coverage would also require a plan amendment.
  • Don’t forget retirement plans. Make sure retirement plans give same-sex spouses the same rights, obligations, and benefits as opposite-sex spouses.

Many employers believe the Obergefell ruling will boost efforts to recruit top talent, facilitate employees’ interstate transfers, and foster a culture of diversity and inclusion. You may find the timing right to launch an effort to promote greater diversity and inclusion in your organization.

Tracy Watts
by Tracy Watts

Senior Partner, National Leader for U.S. Health Policy

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