How will the recent Supreme Court ruling legalizing same-sex marriage affect employee benefits? The short answer is that it will streamline the administration of benefits packages, but may complicate things in the near term as employers adapt to the new rules.
The decision is the culmination of a long struggle by gays and lesbians to gain the same marriage rights that heterosexual couples already enjoy. The legal battles that have consumed the courts and the political fights that have roiled state legislatures have effectively come to an end: marriage equality is the law of the land.
Employee Benefits Before the Ruling
Before the Supreme Court ruling, a private business could bestow benefits, primarily health insurance, to same-sex spouses of employees at their discretion in states where same-sex marriage was legal. The law governing these benefits was on the federal level, however, so as long as same-sex unions weren’t recognized by the federal government, granting such benefits wasn’t required. Following a 2013 court ruling invalidating part of the Defense of Marriage Act, benefits for same-sex partners of federal employees were made available.
Employee Benefits After the Ruling
According to the Insurance Journal, employees in all 50 states will now be obligated to provide benefits to the same-sex spouses of their employees. The requirement will ease the administrative burden for many companies, for a variety of reasons.
First, since same-sex unions are now legal in every state, companies with offices in more than one state can offer the same benefits to all their employees no matter where they live. Until now, those companies had to offer different benefits in different states, depending on each state’s laws around same-sex marriage.
Second, since same-sex marriage is now legally the same as heterosexual marriage, companies do not have to administer separate benefits to same-sex couples. The benefits are the same no matter what the gender of an employee’s spouse happens to be. This allows companies to streamline the administration of their benefits packages even further. Many will start offering benefits under one spousal umbrella; others will consider revising their domestic partnership benefits based on state and local laws.
One thing is certain: companies currently not offering benefits to employees who are in same-sex unions will almost definitely have to do so now. HR managers tasked with making these changes should be on the alert for guidance from federal regulators.
How Employers Can Adapt to the Changes in the Law
State and local laws will likely take some time to catch up with the Supreme Court ruling, so employers need to keep updated on the process and be ready to adapt. Same-sex couples will likely be able to file joint returns on their state tax filings, for example. Employers will no longer have to calculate imputed income for state tax purposes, and the ruling may well affect state laws surrounding domestic partner benefits.
Companies will have to modify their benefit enrollment procedures to accommodate employees in same-sex marriages. Consent and eligibility forms will likely need to be modified as well.
How Employees Will Be Affected
Employees who are in same-sex marriages will have to stay informed on how the benefits rules at their workplaces are going to change. Those employees who are receiving domestic partner benefits may have to switch over to spousal benefits, and should be checking-in with their employers about the administrative steps they need to take to receive those spousal benefits.
At the end of the day, this transition should streamline benefits offerings for companies and employees – but not without some administrative hassle in the meantime.
For more information about what the SCOTUS ruling means for your company’s benefits administration, contact us.