In a 5-4 holding released Friday, June 26, the United States Supreme Court found in Obergefell v. Hodges that state prohibitions on same-sex marriage violate the Equal Protection and Due Process clauses of the Fourteenth Amendment to the U.S. Constitution. In short, this means that every state must allow same-sex couples to marry and must recognize same-sex marriages performed in other states. The decision invalidates any existing state bans on same-sex marriage.
From an employee benefits perspective, the decision brings consistency to employer-sponsored benefit programs that cover spouses in multiple states. For example, states can no longer consider employer-provided health coverage for same-sex spouses to be includible in income for state tax purposes.
Employers in states that currently ban same-sex marriage should be prepared to administer their plans in accordance with the Obergefell decision, meaning that spousal coverage should extend to same-sex spouses, as state insurance law will require that the insurance contract define spouse in accordance with state law.
Employers that sponsor self-insured benefit plans should strongly consider extending coverage to same-sex spouses if the plan covers spouses. Although state insurance law cannot require a self-insured plan to cover same-sex spouses, there is an increased risk under state and federal nondiscrimination laws for plans that define “spouse” to exclude same-sex spouses. The Supreme Court has held that marriage is a fundamental right under the Constitution, thus an ERISA preemption defense seems unlikely to survive.
The Internal Revenue Service and the U.S. Department of Labor may release guidance addressing issues created by Obergefell. In the meantime, employers in states affected by Obergefell should review their benefit plans and consider whether any changes are warranted in light of the decision.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.