Guest Article

(From the May 14, 2007 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

New York Extends Health and Welfare Benefit Eligibility to Employees' Same-Sex Spouses

The State of New York, effective May 1, 2007, has started recognizing its employees' same-sex spouses as eligible to participate in the state's health and welfare benefit plans. However, federal law still does not recognize a same-sex spouse as a "spouse," so New York State employees who enroll their same-sex spouses in these plans still will have to include the value of these benefits in their gross incomes for federal income tax purposes.

According to a press release by New York's Department of Civil Service, the new eligibility policy applies to any same-sex marriage that is legal in the jurisdiction where it was performed. In the United States so far only Massachusetts permits same-sex marriage -- New York still does not. Internationally, Canada, Spain, South Africa, the Netherlands, and Belgium permit same-sex couples to marry. Thus, New York employees may enroll their same-sex spouses in the New York State Health Insurance Program (NYSHIP) and other welfare benefit programs if they married in any of these jurisdictions. The other welfare benefit programs include the New York State Vision Program, Management Confidential Life Insurance Program, New York Public Employee and Retiree Long Term Care Program (NYPERL), and the New York State Dental Insurance Program.

Because New York already permitted employees to enroll their same-sex domestic partners in these plans, the new policy does not appear to make significantly more people eligible for coverage than before. However, there may be substantive advantages under New York law to being covered by these programs as a "spouse" rather than a "domestic partner." But federal tax law, and all other federal law, treats same-sex spouses the same as domestic partners. In other words, employees must include the value of employer-provided health or welfare benefits for same-sex spouses and domestic partners in their gross incomes for federal income and employment tax purposes.

New York is one of thirteen states that currently offer domestic partner benefits to its employees, according to the Human Rights Campaign. However, New York is the first state to recognize employees' same-sex spouses as "spouses" for purposes of their health and welfare benefit plans.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Taina Edlund 202.879.4956, Laura Edwards 202.879.4981, Mike Haberman 202.879.4963, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Laura Morrison 202.879.5653, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Tom Veal 312.946.2595, Deborah Walker 202.879.4955. Copyright 2007, Deloitte.