The June 26, 2015 U.S. Supreme Court ruling in Obergefell v. Hodges that legalized same-sex marriage was a watershed moment in LGBT rights in this country. Part of its far-reaching effect was an impact on how companies provide employee benefits.
As we approach the one-year anniversary of Obergefell, we thought it would be timely to review the areas in which employers, HR personnel, and benefits managers, should focus their compliance efforts.
Redefinition of Marital Status = A Possible Change in Benefits
All of Obergefell’s implications for employee benefits arise from its broader definition of “marriage” to include same-sex couples. This is particularly true in states that did not recognize same-sex marriages before the Supreme Court’s ruling. Under Obergefell, employees in same-sex partnerships who were not previously considered legally married may now be eligible for additional benefits. There may also be changes in how current benefits are provided.
It should be noted that employees in domestic partnerships or civil unions are generally not considered to be “married” under the law, and thus Obergefell would not necessarily extend benefits to employees in those situations.
Health and Welfare Benefits
Under Obergefell, health and welfare plans are now required to cover an employee’s same-sex spouse in the same way as an opposite-sex spouse. This includes not only medical, dental, and vision coverage, but also COBRA, HIPAA, cafeteria plans, flexible spending arrangements, health reimbursement arrangements, and health savings accounts. Life insurance benefits may also be extended to same-sex spouses.
One exception to this might be employers with self-insured plans, who do not have to extend coverage to same-sex spouses. Such employers, however, may risk exposure to litigation based on discrimination and other challenges.
Because the prior Supreme Court ruling in United States v. Windsor already recognized same-sex marriages under federal law, Obergefell did not necessitate any new changes to 401(k) and other employer-administered retirement plans. Employers should ensure, however, that they are in compliance in areas touched by Obergefell, particularly with respect to plan funding, distributions, rollovers, qualified domestic relations orders, beneficiary designations, qualified joint and survivor annuities, qualified pre-retirement survivor annuities, hardship withdrawals, and plan loans.
Family & Medical Leave Act Benefits
Prior to Obergefell, the U.S. Department of Labor (DOL) extended Family & Medical Leave Act (FMLA) rights to married same-sex couples, regardless of whether or not they resided in a state that recognized same-sex marriage. As such, employers should have already ensured compliance with this mandate, and Obergefell only underscores the fact that this is now the law across the country. Employers who violate the FMLA rights of employees in same-sex marriages risk exposure to DOL actions and potential litigation.
Obergefell ushered in a new era of rights for LGBT individuals in the United States, and also created new responsibilities for employers. If you have questions about managing employee benefits post-Obergefell, please contact us.