Co-authored by Christopher K. Buch.

Late last month the US Supreme Court heard oral arguments in two cases concerning same-sex marriage. The Court’s decisions are expected by the end of June and, depending on how the Court rules, the decisions could have a significant impact on employee welfare and retirement plans.


One of the cases (Hollingsworth v. Perry) is somewhat limited in that it concerns the constitutionality of a 2008 California ballot measure (Prop 8) that, in response to a decision by the California Supreme Court recognizing the right of same-sex couples to marry, restricted marriage to one man and one woman. It is likely that the outcome of this case would apply only to the state of California and the determination of married persons under California law.

The case with more potential for broad impact, Windsor v. United States, directly challenges the constitutionality of Section 3 of the Defense of Marriage Act of 1996 (DOMA). DOMA defines “spouse” and “marriage” for purposes of federal laws, including the Internal Revenue Code, Employee Retirement Income Security Act (ERISA), Consolidated Omnibus Budget Reconciliation Act (COBRA), and Family and Medical Leave Act (FMLA) and Health Insurance Portability and Accountability Act of 1996 (HIPAA). It defines “spouse” as a person of an opposite sex who is an individual’s husband or wife, and it defines “marriage” as a legal union between one man and one woman as husband and wife.

Various provisions of ERISA benefit plans use the term “spouse” to determine entitlement to benefits or to administer the plans. Unless the plan document contains a contrary definition, the definition typically used is the one established under federal law, which incorporates the DOMA definition. In many respects federal law guarantees benefits/rights only to “spouses” as defined by federal law, but the plan provisions are permitted (but not required) to go further and extend benefits/rights to other people, such as same-sex partners.

If Section 3 of DOMA is held to be unconstitutional, there would no longer be any basis for distinguishing under federal law between same-sex and opposite-sex spouses. If this occurs, federal common law will likely provide that “spouse” for purposes of federal laws will be determined based upon the substantive law of the state in which the employee/spouse resides. As a result, an ERISA plan would be administered in a manner that treats as spouses same-sex partners who reside in a jurisdiction where same-sex marriages are recognized, and will not treat them as spouses in jurisdictions where same-sex marriages are not recognized.

Examples of benefit plan provisions which may need to be addressed or amended include:


  • Medical Benefits: Under current federal tax law, employees typically are unable to exclude from taxable income the value of employer-provided group health benefits provided to same-sex partners. Currently this results in additional income tax and payroll tax.
  • Flexible Spending Arrangements (FSA), Health Reimbursement Arrangements (HRA) and Health Savings Accounts (HSA): Under federal tax law, the reimbursement of same-sex spouse expenses under an FSA, HRA or HSA would typically result in taxable income to the employee.
  • COBRA Coverage: COBRA does not currently require extending continuation coverage rights to same-sex spouses (or their children).
  • Family and Medical Leave Act Leave: Employees are not currently guaranteed the right to take leave to care for same-sex spouses.
  • Health Insurance Portability and Accountability Act (HIPAA): Same-sex spouses are not currently guaranteed HIPAA special enrollment rights.


  • Qualified Domestic Relations Orders (QDROs): Currently, domestic relations orders regarding same-sex spouses do not typically qualify as QDROs.
  • Qualified Joint and Survivor Annuities (QJSA): Currently, ERISA plans are not required (but they are permitted) to provide to same-sex spouses a “QJSA” equivalent benefit.
  • Timing of Required Distributions: Currently, a same-sex spouse cannot defer the receipt of required minimum distributions from retirement plans until April 1 of the year after the year in which the spouse would have reached age 70½. Instead, the same-sex spouse must begin receiving benefits either within one year of the employee’s death or receive full payment within five years.

In preparation for any action taken by the US Supreme Court, employers and administrators should: (1) review the definition of “spouse” in their benefit plans; (2) determine whether the plan’s definition of “spouse” is based upon federal or state law; (3) identify those states where employees are employed or reside which recognize same-sex spouses; and (4) start the process for determining which benefits (and administration) would need to be revised.