The Windsor decision has an impact on the application of more than 1,000 federal laws, including laws that apply to the administration of employee benefit plans, such as certain sections of the Internal Revenue Code and the Employee Retirement Income Security Act of 1974. Benefit plans of all types are now faced with decisions about how the Windsor decision will affect the treatment of same-sex spouses. These decisions will be especially difficult because currently there is no guidance as to what is considered legally correct treatment of same-sex spouses. For specific actions you can find FMLA case studies on ThinkHR.
In the states where same-sex marriage is recognized, decisions will be more straightforward because benefit plan administrators should be able to treat same-sex spouses the same as all other married couples. Same-sex marriage is currently recognized in Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington state and the District of Columbia. Also, California again recognizes same-sex marriage after a surprisingly fast decision by the U.S. Court of Appeals for the Ninth Circuit permanently refusing to enforce the state's Proposition 8 gay marriage ban. So, in these states, we expect benefit plan administrators to have a relatively easy transition for covered same-sex spouses.
The real challenges arise in situations like the following: a same-sex couple gets legally married in a state that recognizes same-sex marriage but then moves to a state which does not. What then? These situations will be especially complex because the Supreme Court struck down only the definition of marriage in DOMA, which was Section 3 of the law. Section 2 was not at issue in or affected by the Windsor decision, and it says that no state "shall be required to give effect to any public act, record, or judicial proceeding of any other state ... respecting a relationship between persons of the same sex that is treated as a marriage under the laws of such other state ... or a right or claim arising from such relationship." In other words, a state that does not recognize same-sex marriage is not required to recognize the legal marriage of a same-sex couple married in one of the jurisdictions listed above.
This tension between state laws for couples who move from one state to another will be felt by retirement plan administrators when determining beneficiary/survivor rights under 401(k) plans and other pension plans. Administrators for both self-funded and insured health plans will need to consider how to approach covering same-sex spouse's dependents, spousal COBRA obligations after a qualifying event, and structures of health flexible spending accounts. In addition, since health coverage for same-sex spouses is no longer a taxable benefit under the Internal Revenue Code, payroll taxes and withholdings will need to be reviewed and probably revised for same-sex couples.
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