In October, Connecticut became the third state to legalize same-sex marriage with a state Supreme Court ruling that gay couples have the constitutional right to wed (see CT High Court Approves Gay Marriage).
Since then, according to Sibson, the Connecticut Attorney General has issued legal opinions on the implications of the decision, including:
- Connecticut will license same-gender marriages and will recognize same-gender marriages of other states;
- Civil unions will remain an option for couples unless the legislature changes the law, and couples in a civil union can marry without first dissolving their civil union; and
- Parties to a same-gender marriage must be accorded the same tax treatment under state laws as is given to other married couples.
Implications for Health Plans
Employers in Connecticut have the option of extending all health plan benefits to same-gender spouses, or extend only those benefits subject to state mandates without extending all the rights governed by federal laws such as HIPAA and COBRA, the bulletin says. Sibson warns plan sponsors that existing health plan language that includes the terms “spouse,” legal spouse,” or a “person that is legally married to the participant,” could be interpreted to include same and opposite-gender spouses, so sponsors who do not intend this should add clarifying language to plan documentation to communicate their intentions clearly.
Insured plans that offer health benefits that are insured under policies issued in Connecticut will be required to cover same-gender spouses per a November bulletin from the Connecticut Insurance Department, according to Sibson.
As for health reimbursement accounts (HRAs) and health savings accounts (HSAs), Sibson says informal guidance from the Internal Revenue Service suggests that HRAs may reimburse medical expenses for same-gender spouses if the value of the HRA is imputed up front as income to the employee. However, reimbursements for a same-gender spouse from and HSA would result in taxable income and be subject to a 10% penalty.
According to Sibson, because there is no residency requirement to marry in Connecticut, employers outside the state should be prepared to answer questions about same-gender spouses.
Out-of-state employers should:
- Analyze benefit plans to review what benefits are now provided for spouses and to anticipate expectations of plan participants who may request coverage for their same-gender spouses;
- Review and revise existing coverage for same-gender and/or opposite-gender domestic partners;
- Clarify distinctions in different definitions of "domestic partners" and "civil union partners" (e.g., plan definitions and definitions in state laws in various states);
- Check coverage on insured benefits;
- Examine other benefit programs and HR policies with implications for spouses;
- Review the implications for plans and participants who are not located in or do not reside in Connecticut;
- Amend plan documents;
- Calculate imputed income for health and other benefits provided to same-gender spouses not recognized as dependents under the Internal Revenue Code; and
- Draft and design communications to participants about coverage options.
The Sibson Bulletin is available here .
In addition the consultant has compiled a list of action steps for employers, available at http://www.sibson.com/publications/presentations/sgmarriage.pdf .