The Impact Of Obergefell Decision On The Benefits Industry — Employers & Employees Brace Up!!

For a long time, same-sex marriage supporters were in the minority. As early as last year, the figures started to change, resulting in a solid majority of Americans supporting same-sex unions. The union was lawfully accepted on Friday 26th July 2015 when the justices ruled that LGBT individuals have a constitutional right to wed.

The Verdict

Marriage equality was first recognized in 2013 when the Supreme Court gave a verdict on United States v. Windsor case. In this case, a part of federal DOMA (Defense of Marriage Act) was cut down which signified that marriage is legal only between a man and a woman. The same-sex marriage was legalized in Windsor and federal government was mandated to recognize such marriages that were entered into under the state law for the purpose of issuing various federal benefits and other privileges.

The verdict was taken one-step further in the Obergefell case when same-sex marriage is made legalized in all 50 states. Under the Fourteenth Amendment, it is fundamentally agreed on that individuals have the right to marry any individual of their choosing.

The Impact

Though employers already comply with IRS and DOL guidelines, the Obergefell decision might potentially affect employers who sponsor health and welfare benefits plans and employees availing such kind of benefits.

Impacts on employers include:

• The employers, who cover same-sex spouses under their employer-provided health and benefits plans, should be treated differently when it comes to the state income tax.
• “Place of celebration” rule is no longer considered in determining the validity of a marriage.
• Employers offering health coverage and other benefits to spouses of opposite-sex are required to consider whether the same benefits are applied on same-sex spouses too.
• Governmental retirement plans that do not fully adopt IRS rules because of the conflict in state laws are required to review their plans regarding same-sex spouses treatment.

Impacts on employees include:

• Employees who are married to same-sex and are covered by employer-sponsored health plans are no longer required to pay state taxes on imputed income incurred from those benefits.
• Employees with same-sex spouses may avail expanded eligibility for spousal benefits in all states.
• With the legalization of same-sex marriage, some employers are likely to eliminate health coverage benefits to unmarried domestic partners or civil unions of either sex.

The Solution

With the right help and technology in hand, these kinds of updates won’t affect the smooth running of your benefits administration.

To run it uninterruptedly, benefits administration solution providers like TeemWurk carefully monitor the changes and update their system as and when required which eventually help you remain compliant with ever-evolving State and Federal laws.