Nonprofit HR’s Blog

By Julie Gallion

Last week’s determination that the Defense of Marriage Act (DOMA) is unconstitutional has implications on medical insurance plans and retirement plans offered by employers.

Previously, all employees with domestic partner insurance coverage (domestic partners previously included same sex couples who were legally married per their state laws) were taxed on the value of health insurance benefits provided to the partner.  Most employers collected a Declaration of Domestic Partner document as proof that the partner met the definition of domestic partner as stated in the insurance plan document.

Now, with the end of DOMA, employers will no longer have to consider same sex legal spouses as domestic partners.  Instead, employers must offer tax-free insurance benefits to all spouses who are able to produce a legal marriage certificate regardless of gender.  Employers should take the following important steps to ensure they are treating same sex spouses the same as opposite sex spouses.

1.  Conduct a full dependent audit.  Require all employees with spouse coverage to produce a marriage certificate.  A marriage certificate is only legal if issued by the state where the marriage took place.

2.  For employees who are unable to produce a marriage certificate, their “spouse” would not be considered a legal dependent and the employer should request a Declaration of Domestic Partnership form which should be signed by the employee and the partner.

3.  Employers should continue to tax employees on the value of benefits provided to spouses or domestic partners who are unable to prove that they are legal dependents.

4.  Employers should review their Plan Documents and Summary Plan Descriptions to ensure that those documents properly define spouses and domestic partners.  Such language should be updated as necessary so as to not discriminate against legally married same-sex spouses.

5.  Employers should review their Retirement Plan documents to confirm that the definition of Spouse in relation to beneficiaries and Qualified Domestic Relations Orders (QDRO) does not discriminate against same sex spouses.

6.  Employers should encourage employees to review their beneficiary to ensure that the employees either list their spouses as their beneficiary or that their spouse has signed away their rights as a beneficiary of the plan.