DOMA goes down: What’s next for employee benefits communications about spousal/partner benefits

The Supreme Court’s landmark pair of rulings on Wednesday—striking down the Defense of Marriage Act and invalidating a 9th Circuit appellate decision on California’s Proposition 8—were a clear victory for supporters of full marriage equality and rights for same-sex couples.

I was visiting the Benz office in San Francisco this week, and the elation and energy throughout the city was almost tangible. It was exciting to be a part of it all, and also to receive photos and updates of the celebrations around the Supreme Court in my hometown of D.C.

It was a historic and memorable day, to be sure. But now that the speeches and celebrations are over, it’s time to take a hard look at what this Wednesday’s rulings really mean for employee benefits.

With its decisions, the Court set forth several action items in terms of benefits design and administration. Although we know your plates are more than full with how to communicate with employees about health care reform, the fact remains that companies will want to consider and communicate about the implications of the DOMA decision sooner rather than later—particularly those that extend benefits to employees with same-sex spouses/domestic partners.

“[Wednesday’s] rulings by the U.S. Supreme Court could have a significant impact on the way employee benefit plans are administered,” says Scott Macey, president of the ERISA Industry Committee. “Companies will need to carefully evaluate their plans in light of these decisions, [as the rulings] mean that valid same-sex marriages in a state that recognizes them must be recognized by the federal government. That recognition would include tax and ERISA employee benefit matters, including presumably the recognition of tax-exempt spousal coverage under a health plan and the right to a qualified joint and survivor annuity under a pension plan.”

Macey advises employers to “review their current plans and policies with respect to same-sex spouses to determine whether they are in compliance with applicable post-decision rules, determine what actions need to be taken and what areas might need further clarification from the federal government or the courts.” However, he did note that the “decisions could adversely impact the administration of employer-sponsored benefit plans if it results in having to comply with overlapping and inconsistent state laws.”

Same-sex marriages currently are legal in 12 states and the District of Columbia. In anticipation of scores of employee questions—even in states that don’t recognize same-sex marriage—benefits attorney Todd Solomon at McDermott Will & Emery LLP in Chicago spoke to SHRM Online this week and outlined 6 ways the rulings affect employee benefits:

1. Federal laws require companies to treat employees’ same-sex and opposite-sex spouses equally for benefits purposes.

2. Self-insured employers don’t have to offer to cover same-sex spouses (federal law doesn’t mandate it, and state laws don’t apply to self-insured employer plans).

3. Employees don’t have to pay federal income taxes on employer contributions to a same-sex spouse’s benefits coverage. They can pay for same-sex spouses’ coverage under a cafeteria plan with pretax income.

4. Employers must offer COBRA to same-sex spouses.

5. Employers with pension plans must recognize same-sex spouses when determining surviving-spouse annuities. Similarly, employers offering 401(k) plans are required to recognize same-sex spouses when determining death benefits.

6. Employees must be allowed to take FMLA to care for a same-sex spouse with a serious health condition.

Seems pretty cut and dried, right? Not so much. The six things Solomon identified only apply to same-sex couples that were married in and live in a state where same-sex marriage is recognized.

So, what about states where same-sex marriages are illegal? Exactly the problem, say Solomon and other benefits law experts. In those 38 states, employers still need additional guidance on crucial issues like how or if to amend plan language, tax forms and withholding requirements and retirement plan beneficiary designation procedures. It’s also unknown whether employees can claim benefits retroactively for same-sex spouses.

Thus, this is an issue where you’ll want to tread lightly and carefully—in other words, check your politics at the door. It can be easy to let your personal perspective slip into what should be neutral employee communications. It can’t hurt to let an extra set of eyes (besides your legal counsel) review FAQs or other communications that you send out in light of the ruling.

Also—and your attorneys will second this—it’s important not to say anything for certain unless you absolutely know it’s certain. Make sure you clearly account for nuance and uncertainties that exist, depending on the different locations where your business operates.

Communicating as clearly and specifically as possible will go a long way to deflect and diffuse the hot-button emotions that have accompanied these decisions.