Results from Lincoln Financial Group’s most recent “M.O.O.D. of America Study” show only about a third of Americans who identify as LGBT have made changes to their benefit plan elections since the Supreme Court moved to strike down the Defense of Marriage Act (DOMA).
By way of background, Eric Reisenwitz, senior vice president and head of group benefits product and operations for Lincoln Financial, explains that under a series of recent court rulings, same-sex couples in states that recognized their marriage obtained marriage-based federal rights and benefits under employee benefit plans. However, the courts did not fully address DOMA provisions that gave individual states the right to recognize, or not recognize, same-sex marriages of other states. Thus, regulatory guidance was required about employee benefits for same-sex spouses in states that did not recognize same-sex marriage.
Following the SCOTUS decision in Obergefell v. Hodges (June 26, 2015), the Internal Revenue Service (IRS) and Department of Labor (DOL) issued guidance in the form of several rulings and releases stating that if a same-sex marriage was validly entered into in a state whose laws authorize same-sex marriages, it would be recognized under the Employee Retirement Income Security Act (ERISA) and the tax laws even if the couple resided in a state not recognizing the validity of their marriage.
The series of court decisions and regulatory decrees completely changed the benefits ballgame for a large slice of American society, Reisenwitz says. SCOTUS, DOL and IRS effectively ruled the federal DOMA statute was “invalid, for no legitimate purpose overcomes the purpose and effect to disparage and injure those whom the State, by its marriage laws, sought to protect in personhood and dignity.”
A little more than a year since this new paradigm was fully established, the Lincoln research finds major change underway for LGBT workers, as well as plan sponsors in charge of maintaining compliant benefit offerings. Interestingly, many are still assessing the new opportunities and challenges that come along with expanded benefit plan access, with relatively few people already having made changes to their benefits elections.
“Our research shows still only about a third of those in the LGBT community have taken the time to actively reassess or change their benefits selections, which is about what we would expect around this point, given how complex many of these decisions are going to be,” Reisenwitz says. “We were happy to see that many companies are doing a lot to promote awareness of new benefit opportunities coming out of the ruling.”
The M.O.O.D. survey further shows that roughly 50% of LGBT employees “are still unsure of the impact the Obergefell ruling will have in the workplace,” so there is still opportunity and a need to educate, Reisenwitz says. “These are very complex decisions and the employer should step up and make sure their employees are taking full advantage of the programs they are offering. It’s a big opportunity for employers to provide targeted education and advice, leading to stronger benefit programs and more financially fit employees. Looking at the impact the ruling has on retirement benefits and health benefits, this is something a skilled adviser should be able to support.”
The Lincoln research concludes that, just like any other demographic group participating in benefit plans, LGBT workers can be targeting with “concise, actionable communication that explains in simple terms what has changed and why there are new opportunities.”
“If you are able to sit down and clearly explain the new opportunities, workers will have much more of an interest and ability to make these decisions,” Reisenwitz concludes. “Of course, the LGBT group, just like the wider population, they are very diverse in terms of financial knowledge and financial wellness, so there is a need for nuance.”