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On June 26, 2013, the United States Supreme Court declared Section 3 of the federal Defense of Marriage Act (“DOMA”) unconstitutional.1 Section 3 of DOMA, which defined “spouse” and “marriage” for all provisions of federal law, provided that a “spouse” was “a person of the opposite sex who is a husband or wife” and “marriage” was a “legal union between one man and one woman as husband and wife.” However, the Supreme Court did not consider the validity of Section 2 of DOMA, which gives states the right to deny recognition of same-sex marriages valid in other states; accordingly, Section 2 remains in effect. The removal of Section 3 and the retention of Section 2 have broad implications for employee benefit plans and raise many questions regarding the choice of law between states that do and do not recognize same-sex marriage, whether any benefits are retroactive, and what position the Internal Revenue Service (“IRS”) will take on the recognition of same-sex marriage for Federal tax purposes.
Until the IRS issues guidance on the subject, Windsor will require employee benefit plans in states that recognize same-sex marriage to provide identical benefits to all married employees, provided that the place of celebration and state of residence both recognize same-sex marriage. This change likely has the following effects:
A. Employee benefit plans that currently offer benefits to same-sex spouses:
B. Employer benefit plans that do not currently offer benefits to their employees’ spouses but choose to do so in the future must then also provide identical benefits to employees’ same-sex spouses.
Because Section 2 of DOMA was not at issue in Windsor and thus remains in effect, employee benefit plans in states that do not recognize same-sex marriage may not be required to provide same-sex spouses of married employees with benefits identical to those provided to opposite-sex spouses of married employees. As noted earlier, the IRS is expected to issue guidance on whether the law of the state of residence or the law of the place of celebration controls who may receive spousal benefits. Until such guidance is issued, certain considerations should be kept in mind:8
1 Windsor v. United States, Sup Ct. Dket. No. 12-307 (2013); 570 U.S. ___ (2013).
2 Statement by the President on the Supreme Court Ruling on the Defense of Marriage Act, available at http://www.whitehouse.gov/doma-statement.
3 The Social Security Act provides that an applicant’s family status with respect to an insured individual is determined by reference to the domicile of the insured individual at the time an application for benefits is filed, or, if such person is dead, the courts of the state in which he or she was domiciled at the time of death, would find that the applicant and such insured individual were validly married at the time of such application, or if the insured is dead, at the time he or she died. See 42 U.S.C. 416(h). The statute governing veterans’ benefits provides that, in determining whether or not a person is or was the spouse of a veteran, the marriage is proven as valid according to the law of the place where the parties resided at the time of the marriage or the law of the place where the parties resided when the right to benefits accrued. See 38 U.S.C. 103(c).
4 To elect a survivor annuity under CSRS or FERS, a retiree must write to the OPM and send a copy of their marriage certificate with the date of the marriage and name of the spouse. Elections under CSRS and FERS are irrevocable and should be carefully considered.
5 In Rev. Rul. 58-68, 1958-1 C.B. 60 (dealing with the recognition of a common-law marriage in a state that requires a marriage ceremony) the IRS adopted a place of celebration rule. Uncertainty remains in the same-sex marriage context and a reaffirmation of the place of celebration rule or a statement that the applicable state law is the state of residence from the IRS is necessary.
7 FMLA regulations provide for a state of residence rule in defining the term “spouse.” See CFR § 825.102.