PA Now Recognizes Same-sex Marriages – May 20, 2014 District Court Ruling
Employers should update their employee benefit plans and policies to address the change in Pennsylvania’s marriage license law. Due to a recent PA District Court Ruling on May 20, 2014, same-sex spouses qualify as “spouses” with continuation coverage rights under both federal COBRA and Pennsylvania’s mini-COBRA law. Benefits provided to same-sex spouses should be treated as a tax favored expense for federal tax purposes and employees residing in Pennsylvania should now have the right to take leave under the FMLA to care for a same-sex spouse with a serious health condition.
It appears that insurers providing contracts in PA are automatically updating their contract language to reflect this change to Pennsylvania’s marriage license law. We are recommending that you notify your HBI Benefit Analyst or Consultant immediately to make certain your policies are adjusted properly so that same-sex spouses can be added quickly when coverage is requested. Employees already married to a same-sex spouse should be able to cover their spouse immediately. Employees that marry in the future should be permitted to add their same-sex spouse on the marriage date, assuming they notify Human Resources within 31 days of the marriage event (i.e., qualifying change-in-status event). Most insurers and employer cafeteria plans do not permit an election change outside the 31 day window.
Self-insured Plan Sponsors
As communicated in a previous Expert Update, we are highly recommending that all our clients, including those that are self-insured, extend coverage to ALL spouses. Self-insured employers that continue to extend benefits to opposite-sex spouses only could be faced with litigation.
It is anticipated that state agencies, such as the Pennsylvania Department of Revenue, will issue guidance very soon regarding the impact of the court’s decision (for example, changes in state tax treatment for benefits provided to same-sex couples).
No Change to Domestic Partner Coverage
The recent district court ruling that has made same-sex marriage legal in Pennsylvania has not changed the way domestic partners are viewed with respect to ERISA welfare plans. Employers that offer coverage to domestic partners, regardless of whether the partnership is a same-sex arrangement, must still make certain that their benefit policy language addresses their intent to coverage domestic partnerships. It is also critical to make sure that employee contributions for domestic partner benefits are handled properly for tax purposes when the partner does not qualify for a dependency deduction. It is important to consider the following:
- Review your benefits package to determine which benefits should be offered to domestic partners;
- If the health plan is insured, confirm that the insurance carrier offers domestic partner coverage and will make any necessary plan amendments;
- Consider what eligibility documentation will be required of domestic partners (or their children), such as a written statement describing the relationship; and
- Consult with HBI or your payroll vendor regarding the tax implications of providing domestic partner benefits, and determine whether you want to “gross up” employee pay to offset the tax consequence of domestic partner benefits.
IRS FAQ – Answers to Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions
Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This document should be reviewed by your legal counsel or tax consultant before use.
Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.