News Flash: September 19, 2013 – DOL Follows IRS' Lead in Recognizing Legal Same-Sex Marriages


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News Flash: September 19, 2013 – DOL Follows IRS' Lead in Recognizing Legal Same-Sex Marriages

  1. 1. News Flash: September 19, 2013 – DOL Follows IRS' Lead in Recognizing Legal Same-Sex Marriages A new technical release from the DOL states that, like the IRS, the DOL will look only at the “state of celebration” when defining the terms “spouse” and “marriage” in its rulings, regulations, guidance, etc. under ERISA and certain other employee benefits-related provisions of federal law. For information on the IRS’ ruling on this issue, see Willis Human Capital Practice News Flash: August 30, 2013 – Legal Same-Sex Marriages Recognized Under Federal Tax Law. For employers providing health coverage to same-sex spouses, this new release means that the DOL has concluded that all legally married same-sex spouses have the same rights as opposite-sex spouses under ERISA and the various laws which are incorporated into ERISA (e.g., COBRA and the HIPAA special enrollment provisions). Exactly what employers must do to implement that conclusion is yet to be determined. The DOL notes that the technical release is “general guidance” and that the DOL “intends to issue future guidance addressing specific provisions of ERISA and its regulations.” Background On June 26, 2013, the U.S. Supreme Court invalidated a key provision of the 1996 Defense of Marriage Act (for details, see Willis Human Capital Practice Alert, August 2013, “Supreme Court Rules on Same-Sex Marriage and DOMA: Still Waiting for Guidance”). Under the invalidated provision, no same-sex marriages were recognized for any federal law purposes, including laws governing employee benefits. This meant, among other things, that an employee’s same-sex spouse could not be a qualified beneficiary under COBRA, and a same-sex marriage was not considered a HIPAA special enrollment event. In the wake of the Supreme Court’s decision, it was unclear which same-sex marriages would be recognized by the federal agencies responsible for implementing federal laws governing employee benefits. It was possible, for example, that an otherwise valid same-sex marriage would not be recognized unless the couple lived in a state that recognized their marriage. NOTE: That is exactly the position that the DOL took regarding the FMLA, stating that a spouse is “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides.” A DOL fact sheet provides additional information. Currently, Washington D.C. and 13 states recognize same-sex marriages (those states are California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington). Because of the uncertainty following the Supreme Court decision, employers were advised to hold off on changing their systems and procedures related to health and other welfare benefits until federal agencies issued guidance on how they would implement the Supreme Court’s decision.
  2. 2. In late August, the IRS issued a ruling that the law in the “state of celebration” would determine whether an individual was another’s spouse for federal tax purposes (see Willis Human Capital Practice News Flash: August 30, 2013 – Legal Same-Sex Marriages Recognized Under Federal Tax Law). Employers should keep in mind that the various state and local taxing authorities currently apply a variety of different rules for determining whether benefits provided to a same-sex spouses are taxable, and they may or may not follow this federal ruling on recognition of same-sex spouses. Given this situation, the proper withholding rules to apply in many states and localities may remain unclear until their taxing authorities issue guidance. The DOL’s Technical Release The DOL notes that its rule “recognizes marriages that are valid in the state in which they were celebrated, regardless of the married couple’s domicile.” The DOL will treat two same-sex individuals as one another’s spouses if their marriage was legal in the state, territory or foreign country where it occurred, even if they live in a state that does not recognize same-sex marriages. For example, a same-sex couple that marries in Massachusetts (a state that authorizes same-sex marriages) will be treated as married for ERISA purposes even if the couple resides in Missouri (a state that does not recognize same-sex marriages). This “state of celebration” rule allows as much uniformity as possible for employers administering plans in multiple states. It also appears that the DOL’s rule is subject to the same three caveats specified in the IRS’ earlier ruling:  For a same-sex marriage to be recognized, it must have occurred in a state, territory or foreign country that authorized same-sex marriages at the time.  Couples that have entered into other similar relationships (e.g., domestic partnerships and civil unions) will not be treated as spouses under ERISA.  This ruling applies only for purposes of the ERISA and Internal Revenue Code provisions that the DOL interprets. It does not apply to other federal laws such as the FMLA. The DOL does note, however, that the IRS and the Department of Health and Human Services have joined in its interpretation with respect to laws that have parallel provisions in ERISA, the Code and the Public Health Service Act (e.g., COBRA and the HIPAA special enrollment provisions). Like the earlier IRS ruling, the DOL’s position will have far-reaching consequences for purposes of administering requirements such as COBRA and HIPAA special enrollments. Moreover, it appears that the DOL’s technical release is more of a statement of intent than an actual rule with an effective date by which it must be implemented. Even so, this ruling enables employers to begin making changes to their systems and procedures related to health and other welfare benefits.
  3. 3. Conclusion Full implementation of this initial release on same-sex spouses will require detailed analysis of many different requirements that apply to health and welfare benefits and, in many cases, additional guidance will be needed. NLRG is analyzing the guidance to date on same-sex spouses participating in employer-sponsored health and welfare benefit plans, and will provide additional information in a future publication. The information in this publication is not intended as legal or tax advice and has been prepared solely for informational purposes. You may wish to consult your attorney or tax adviser regarding issues raised in this publication.