DOMA is a federal law that defines marriage as between a man and a woman. Rich Stover, principal at Buck Consultants, noted that even if DOMA is upheld, employers need to address the issue as more and more states recognize same-sex marriages, and employees move from state to state.
Stover explained to PLANSPONSOR that some employers do not want to provide these benefits due to the administrative burden. Whatever an employer’s choice, Stover advised plan sponsors to not let the courts define spouse for them—if the plan does not include a formal definition of spouse, the courts may define coverage more broadly than the employer intended.
For example, if an employer does not intend to cover same-sex spouses, but the plan only defines spouses as individuals to whom employees are “legally married,” an employee who married a same-sex spouse in New York, where such marriages are recognized, could legally be considered entitled to spousal benefits under the plan. “Employers need to make the definition of spouse clear about what they want,” Stover said.The fact that a same-sex spouse is not recognized under federal law creates some unique challenges for designing and administering consumer driven plans with health savings accounts (HSAs), according to Stover. He noted that if an employee has a same-sex spouse and has family coverage under the employer’s medical plan, the employer may contribute more money to the HSA based on that. However, under current federal law, the account cannot be used for same-sex spouse expenses. If money is used for same-sex spouse expenses, it is subject to regular tax, penalty and reporting laws.
Stover said the same issue applies to health and dependent care flexible spending accounts (FSAs); it creates very cumbersome administration. While there’s nothing employers can do about the law, Stover said they can—and should— carefully communicate to employees their rights and options.
A recent brief filed with the Supreme Court by the American Benefits Council included a listing of administrative burdens imposed on employers by having federal and state laws mismatched (see “Council Says DOMA Burdens Employers”).
Stover said if the Supreme Court throws out DOMA, it will be a more immediate issue for retirement plans, since employers cannot deny spousal benefits in these plans. Documents will have to be amended to include recognition of same-sex spouses. He noted that for medical insurance plans, an employer can decide if they want to cover any spouses or dependents at all.Stover recommended employers review each of their benefits to see if changes need to be made to address same-sex marriages. Even leave benefits may need to be changed—to allow employees to attend funerals or care for family members of same-sex spouses. “It will be a [significant] effort for employers to determine what changes are needed under the law and what choices they have,” Stover concluded.