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.

TIP: I-9 & COBRA Can Bite You for Incomplete Paperwork

Irked about the new Form I-9? Want to avoid the sting of COBRA non-compliance?

It's better to fill out than pay up - and here's why:

Form I-9 Regs

The Immigration Reform and Control Act (IRCA) of 1986 requires all employers to verify a new hire's authorization to work in the United States by completing Form I-9. Section 1 of the I-9 must be completed on the employee's first day of work for pay, and Section 2 must be completed within 3 business days of the employee's first day of work.

The I-9 form is comprised of 8 pages of instruction, making it a heavy enough load to intimidate new hires from filling it out, so employers might not get it back from them at all. Yet, because it is the responsibility of employers to complete and retain the form, you can potentially suffer a penalty of $110 per day, dating back to the period the forms should have been completed.

Let's put this in context. If you didn't get and retain the I-9 from a hire, say, 2 years ago, and you were audited by the Immigration and Customs Enforcement (ICE), you might be liable for anywhere up to $80,300 in fines. Believe it or not, there are real cases of companies being fined more than $1 million dollars.

Don't Let COBRA Bite You!

Employers can also potentially meet similar circumstances with the Consolidated Omnibus Budget Reconciliation Act (COBRA), the law giving certain workers and their families who lose their health benefits the right to choose to continue their group health plan for limited period of time. Employers that fail to offer the benefits of COBRA in a timely manner can be hit with an excise tax of up to $200 per day - even more than the I-9 penalty.

Fear not, however. All that is needed is an Offer of Insurance letter and proof that the former employee either accepted or declined it. It's amazing how many headaches the price of one stamp can prevent!

Do What You Do Best, and Let Benay Do the Rest!

Our job at Benay is to handle all of these back-office issues for employers.

We make sure that our clients have their new employees fill out the new I-9 forms, which were published as of March 8, 2013, and ensure they are being used by May 7, 2013. Additionally, we retain these records on behalf of our clients for the period required by ICE. 

We also take care of all COBRA letters and documentation for our client's former employees, making sure nothing slips through the cracks.

Benay does all of the behind-the-scenes documentation, filing, and more. If you'd like to spend more time growing your business and less time managing your back office, give us a call.