On Friday, December 7, 2012 the U.S. Supreme Court agreed to hear a case on the constitutionality of the Defense of Marriage Act (DOMA) and a case concerning the 2008 ballot measure in California that banned same-sex marriage. The cases will be heard by the Court in late March 2013 with the decisions to come at the end of June 2013.
These cases — if they recognize same-sex marriage nationwide — could have a big impact on employee benefit adminstration. If same-sex marriages are recognized for purposes of federal law, it will affect the taxability of health coverage supplied to same-sex spouses who are not dependents of the employee, open the door to HIPAA special enrollments due to same-sex marriage, might prohibit benefit plans from restricting coverage to only opposite-sex spouses and affect retirement plan survivor beneficiaries and waiver rights. In short, this decision could affect any right, advantage, obligation or entitlement under a benefit plan that today is reserved for only opposite-sex spouses.
The first case, U.S. v. Windsor, involves the estate taxes paid by Edith Windsor after her same-sex partner of 44 years died in 2009, after they had married in 2007. Because of DOMA, Windsor had to pay $363,000 in estate taxes; if she had been married to a man, she would not have owed the taxes.
DOMA defines marriage as between a man and a woman. The law does not recognize same-sex marriage for purposes of all federal laws, including ERISA, the Tax Code and the Family and Medical Leave Act (FMLA).
Four district courts and two courts of appeals have declared DOMA unconstitutional. President Obama announced in 2011 that his administration would no longer defend DOMA against challenges that it violated the Constitution’s guarantee of equal protection. Because the administration won’t defend DOMA, a five-person House leadership body called the Bipartisan Legal Advisory Group will argue the case before the Supreme Court.
In Hollingsworth v. Perry, the U.S. Court of Appeals for the Ninth Circuit ruled that the 2008 California ballot measure banning same-sex marriage, passed by voters by 52 percent to 48 percent after a period when same-sex marriage was legal, was unconstitutional because it stripped same-sex couples of a right to marry without adequate justification. Hollingsworth offers the Court has a more direct path to decide whether the right to marry may be limited based on sexual orientation.
The justices could decide these cases in several different ways. The Court could:
- Issue a sweeping ruling that would cast aside bans on same-sex marriage nationwide;
- Give DOMA a haircut of sorts, and require that same-sex spouses be treated as “spouses” for all purposes under federal law (such as the Tax Code), but continue to permit states to forbid same-sex marriage and to refuse to recognize same-sex marriages validly formed elsewhere;
- Go a bit futher, and permit states to forbid same-sex marriage, but compel them to recognize same-sex marriages validly formed in other states;
- Issue a narrow decision, such as ruling that voters in California cannot withdraw a right previously granted to gay men and lesbian women; or
- Skirt the provocative issues by basing its rulings on standing — limiting the Court’s jurisdiction to concrete, ongoing disputes between parties with an actual stake in the outcome — thereby allowing the Court to avoid the same-sex marriage issue.
Stay tuned for the Court’s June decision. Depending on which of the various options the Court adopts, its decision could have a tremendous impact on benefit plans or no impact at all.