Thursday, September 12, 2013

Same Corporate Compliance Required For Same-Sex Marriages

The Supreme Court's decision on the "Defense of Marriage Act" has forced employers to scramble to ensure their employee benefits plans comply. While creating new responsibilities for employers, it also offers new opportunities and tax strategies for civil unions and/or domestic partners. Employers must continue to monitor their state's marriage and partnership laws in order to keep their employer-provided benefits packages and company policies up-to-date, or risk violating laws and discriminating against newly protected employees and their spouses or partners.

There are currently 13 states that recognize and approve same-sex marriages. On August 29, 2013, the IRS released guidelines that show the effects of the Court's decision on various tax issues, including the coverage of same-sex spouses under employer-sponsored benefit plans.

Several of the key Employee Benefit Implications of the IRS Ruling are:

  • Same-sex couples can receive the same tax break on health coverage that other couples have been receiving.
  • Employees will now be able to seek reimbursement from flexible health spending accounts for the medical expenses of same-sex spouses.
  • The value of employer-provided health coverage for employee's same-sex spouse no longer is to be included in the employee's gross income for federal tax purposes.
  • Contributions made by an employee for the coverage of a same-sex spouse are no longer required to be paid on an after-tax basis.
  • A retirement plan must recognize a same-sex spouse for purposes of qualified joint and survivor annuity and spouse death benefits.
The Supreme Court's decision means same-sex spouses are entitled to a host of benefits they were denied previously. Now in New York, same-sex spouses should be offered education and funeral leave as well as the right to take leaves under the federal Family and Medical Leave Act (FMLA) to care for an ill same-sex spouse.

In addition, other employer-provided benefits and policies for opposite-sex spouses also must be offered without discrimination to same-sex spouses.

Legal ambiguities remain and will have to be resolved in future court decisions but here are some tips: 

Benay's Role

Benay works diligently to understand the changing laws for our clients' respective states so that we can effectively inform and advise them.

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