The Supreme Courts 2013 ruling striking down the Defense of Marriage Acts definition of marriage as between a man and a woman, has major implications for employee benefit plans, according to Neal Schelberg, a partner at Proskauer Rose. Implications that employers need to know about and may be looking for guidance on from their trusted adviser.
The General Accounting Office has estimated more than 1,000 employee benefit rights are based on an employees marital status, Schelberg told employers at the International Federation of Employee Benefit Plans legislative update last week.
Because a persons marital status determines numerous benefits, rights and privileges, under federal law, striking down DOMAs limitation of marriage to opposite-sex unions has far-reaching implications, including implications under ERISA plans, he added.
The Supreme Courts June 26, 2013 decision in United States vs. Windsor impacts pension plans and health plans, because a new category of beneficiaries same-sex spouses will now be eligible for benefits coverage, Schelberg said.
The high court did not, however, grant same-sex couples a constitutional right to marry, nor did it strike down state laws refusing to recognize same-sex marriage, which complicates benefit administration, especially for multi-state plans, Schelberg says. For benefits purposes, federal law looks to state law to determine marital status.
Plans will face challenges in navigating the definition of spouse, which may vary in the different states where the plan operates and where participants live, he said.
Where you come in
Benefit advisers can provide value by having an in-depth knowledge of the marriage laws in states their clients plans serve and participants live.
Some federal agencies have recognized a rule called the state of celebration rule, which allows for a same-sex couple married in one of the states that recognizes same-sex marriages, to carry that marital status with them to whatever state they may live in.
Although some states have also adopted the state of celebration rule, federal law does not require the states to, further diversifying how marital status will be determined for an employers plan participants.
On Sept. 16, 2013 the Internal Revenue Service released guidance specifying that retirement plans are not required to recognize same-sex marriages prior to June 26, 2013 and that retirement plans are not required to have adopted the celebration rule until Sept. 16, 2013. Plans that used the domicile rule prior to that will not be penalized, it adds.
Retirement plans are permitted to apply the DOMA decision retroactively and recognize same-sex marriage prior to June 26, 2013, but must be amended by Dec. 31, 2014 specifying the retroactive date and the purposes for which the rules are being applied retrocactively, Schelberg says.
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