On June 26, 2013, the United States Supreme Court issued its highly anticipated decision in United States
v. Windsor [http://www.supremecourt.gov/opinions/12pdf/12-307_6j37.pdf]. The Court ruled that a
portion of the Defense of Marriage Act (“DOMA”) [http://www.gpo.gov/fdsys/pkg/BILLS-104hr3396enr/
pdf/BILLS-104hr3396enr.pdf] is unconstitutional. DOMA, which was enacted in 1996, restricted the
definitions of the terms “marriage” and “spouse” for purposes of any federal law to include only oppositesex
marriages. The effect of this provision was to deny recognition of same-sex marriages for purposes
of all federal laws, including the laws governing taxation and employee benefits. As a result, same-sex
couples married in a jurisdiction permitting same-sex marriage, while treated as legally married for state
law purposes, were not treated as married under any federal law.
In a 5-4 decision, the Supreme Court in Windsor found that this provision of DOMA is “unconstitutional
as a deprivation of the liberty of the person protected by the Fifth Amendment of the Constitution.” In
explaining its decision, Justice Kennedy, writing for the majority, stated that:
DOMA instructs all federal officials, and indeed all persons with whom same-sex couples interact,
including their own children, that their marriage is less worthy than the marriages of others.
The federal statute is invalid, for no legitimate purpose overcomes the purpose and effect to
disparage and to injure those whom the State [New York], by its marriage laws, sought to protect in
personhood and dignity. By seeking to displace this protection and treating those persons as living
in marriages less respected than others, the federal statute is in violation of the Fifth Amendment.
As a result of the decision in Windsor, the federal government will now recognize same-sex marriages in
those states where same-sex marriages are permitted. Same-sex marriage is permitted in the following
jurisdictions: California (effective June 28, 2013, as a result of the Supreme Court’s Proposition 8 decision
in Hollingsworth v. Perry [http://www.supremecourt.gov/opinions/12pdf/12-144_8ok0.pdf]); Connecticut;
Delaware (effective July 1, 2013); Iowa; Maine; Maryland; Massachusetts; Minnesota (effective August 1,
2013); New Hampshire; New York; Rhode Island (effective August 1, 2013); Vermont; Washington; and
Washington, DC. Therefore, at least for same-sex couples legally-married and residing in one these
jurisdictions, their marriages will now be recognized as legal marriages for the purposes of all federal
Federal recognition of same-sex marriages will have a significant impact on employee benefit plans
and arrangements. As a result of the decision in Windsor, for purposes of employee benefit plans and
arrangements governed by the Internal Revenue Code (“Code”) and the Employee Retirement Income
Security Act (“ERISA”), a spouse will include a same-sex spouse, at least with respect to those jurisdictions
within which same-sex marriage is legal.
Summarized below are the principal effects of the decision on common employee benefit plans and
arrangements for legally married same-sex spouses.
1. Health Benefits – The value of health coverage (including dental and vision) for a same-sex spouse
no longer will be imputed in the employee’s taxable income. In addition, any employee premium
contributions in connection with coverage for a same-sex spouse may now be made on a pre-tax
basis pursuant to a Code Section 125 cafeteria plan.
2. Health FSAs, HRAs and HSAs – Employees may use amounts available under a health flexible
spending account, a health reimbursement account or a health savings account to reimburse the
medical expenses of a same-sex spouse.
3. Cafeteria Plan Change of Status Rules – Generally, an employee may only change a cafeteria plan
election mid-year (i.e., outside of an open enrollment period), if a “change of status” event has
occurred. A change of status for a same-sex spouse will now be considered a change of status under
the cafeteria plan rules.
4. COBRA/Special Enrollment Rules – A same sex spouse will be treated as a qualified beneficiary under
the federal COBRA continuation coverage rules. The HIPAA special enrollment rules also will apply
with respect to same-sex spouses.
5. FMLA – Covered employers must now provide leave to eligible employees to care for an FMLAqualifying
condition of a same-sex spouse, if the covered employee resides in a state where same-sex
marriage is legally recognized.
6. Retirement Plans – A same-sex spouse will be treated as a spouse for purposes of retirement
plans governed by ERISA and the Code, including 401(k) plans, 403(b) plans, defined benefit plans,
and 457(b) plans. As a result, a same-sex spouse generally will have the same spousal rights as an
opposite-sex spouse. For example:
a. A same-sex spouse will be the beneficiary of the employee participant, unless the spouse
consents to the designation of a different beneficiary. Further IRS guidance will be required
regarding the continued validity of prior beneficiary designations that likely were made without a
requirement that the consent of a same-sex spouse be obtained.
b. Benefits paid under certain types of plans (defined benefit plans, money purchase pension plans
and other defined contribution plans providing for annuity forms of payment) generally must be
paid in the form of a 50% joint and survivor annuity with the same-sex spouse as the co-annuitant,
unless the spouse consents to a different form of payment.
c. A same-sex spouse will be allowed to roll over an eligible distribution from a plan to an IRA or
other retirement plan.
d. A same-sex spouse will be treated as a spouse for purposes of the qualified domestic relations
e. Hardship distributions under certain types of plans (generally, defined contribution plans that
permit such distributions) will be available to pay for medical care, tuition and burial expenses with
respect to a same-sex spouse.
7. Other Fringe Benefits – With respect to other benefit arrangements governed by the Code, benefits
provided to a same-sex spouse generally should be treated for tax purposes in the same manner as
benefits provided to an opposite-sex spouse.
Many plans were drafted to specifically incorporate the DOMA definition of spouse to avoid any confusion
regarding the treatment of same-sex spouses under the terms of the plan. Therefore, plan documents will
need to be reviewed to determine if the DOMA definition of spouse is reflected. If it is, an amendment to
the plan may be required. With respect to qualified retirement plans, any required amendment generally
will need to be adopted by the last day of the current plan year, unless the IRS provides for a delayed
amendment due date.
At present, it is unclear how couples who were legally-married in a jurisdiction recognizing same-sex
marriage, but who are residing in a jurisdiction that does not recognize the validity of the marriage, will be
treated under federal law. For example, if an employee was legally-married to a same-sex spouse in New
York, but is residing in Pennsylvania (where same-sex marriages are not recognized), it is unclear if that
employee would be considered to be legally married under federal law. Further guidance on this issue will
be required. Finally, the Windsor decision has no impact on unmarried same-sex domestic partners.
The IRS has indicated that it will be moving swiftly to provide guidance on the impact of the Windsor
decision. Therefore, we anticipate that the IRS and other federal agencies will be issuing guidance on
many of the issues noted above in the near future.
If you have any questions about this memorandum, please contact Aaron Pierce in our Syracuse office
(315-218-8635, email@example.com) or any of the other members of our Employee Benefits and Executive
Compensation Practice Group listed below.