The Council sent a letter to the U.S. Treasury Department, Labor Department, Health and Human Services Department and Internal Revenue Service requesting interim guidance or transition relief prior to July 22, when the recent United States v. Windsor decision becomes effective.
“In the aftermath of the U.S. Supreme Court’s decision to strike down key provisions of the Defense of Marriage Act, employers who sponsor health and retirement benefit plans for workers and their spouses are in urgent need of guidance indicating how to comply with federal law,” said Council President James A. Klein.
The letter asked for clarification of”who a plan should treat as a spouse under applicable federal [tax and benefit] law.” Much of the current uncertainty comes from the existing law being unclear as to whether, for purposes of the federal laws governing employer-sponsored benefits, a “spouse” only encompasses an employee’s same-sex spouse that resides in a state that recognizes same-sex marriage or whether such term includes a same-sex spouse subject to a valid marriage license regardless of the spouse’s current state of domicile.
The Council stated in the letter that it would support a rule that determines marriage by whether an individual holds a valid state marriage license, rather than the laws applicable to their current state of domicile. A state of domicile rule would be “much more difficult and expensive for benefit plans to administer.”
The Council identified relevant issues in need of clarification such as:
- Whether the change in law could require an employer to provide retroactive benefits or re-administer benefits previously provided under the terms of a plan;
- The need for additional time for plans to comply with the new legal and regulatory landscape;
- The treatment of employer-provided health coverage as imputed income; and
- The ability of affected employees and employers alike to seek refunds of federal income or payroll taxes paid for health coverage attributable to an employee's same-sex spouse.
While the Council applauded the Windsor ruling, it acknowledged the new challenges now facing employers, particularly those that are large and sponsor employee benefits in multiple states.
"The court's rejection of DOMA freed employers from numerous financial and administrative burdens, but created innumerable other questions that require prompt answers," said Klein. "We urge the federal agencies to issue guidance as soon as possible."
A copy of the letter can be found here.
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