Plan Amendment to Permit Same Sex Spouses

[Chaz]

An employer's cafeteria plan and underlying benefit plans excludes same sex spouses. In June 2014, the employer amends the plan to make same sex spouses eligible for benefits. Can the employer permit employees (who married their same sex spouses in 2013 or earlier) change their elections mid-year to add their same sex spouses to the plan? If so, under what provision of the proposed cafeteria plan regulations?

It seems intuitive that these election changes should be permitted but I am not finding anything in the regulations to support this intuition. Does anyone have any thoughts?

[Chaz]

Does anyone have any thoughts?

[GMK]

This and other on-line articles all suggest getting advice from your lawyer before opening a same-gender special enrollment period. I agree that it seems like a valid newly-eligible / new dependent situation.

https://welcome.willis.com/nlrgclientcommunication/Shared%20Documents/HIPAA/Special%20Enrollment.pdf

[Chaz]

HIPAA's special enrollment rights apply in the event that, among other things, an employee gets married, and requires the spouse to be added to the plan if the employee notifies the plan within a specified period (e.g., 30 days after marriage). In my circumstance, the affected employees were married long before the date that the plan was amended. I don't see these special enrollment rights being applicable here.

[GMK]

Maybe one could argue that the spouse's status as a tax dependent changed (wasn't one before, is now). And if Medicare can have a special enrollment period, why not others? But it would be nice to get a few confirming words from someone at HHS.

[Chaz]

Well, it is really the IRS who needs to provide guidance because this is a Section 125 issue but I get your point.

[Peter Gulia]

Without answering Chaz's question, could a properly behaving practitioner describe to her client the practitioner's view that it is unlikely that the Internal Revenue Service would pursue enforcement against an employer that treated the plan amendment as if it were a section 1.125-4©(2) change in status?

[GMK]

In my circumstance, the affected employees were married long before the date that the plan was amended.

But not in the eyes of the IRS. The IRS did not recognize the marriage and did require them to file as single taxpayers. Now it won't let them file as singles. Instead, the IRS said, 'as of this date you are no longer single persons (for tax purposes), but you are now married spouses.' As a result, they must file as married persons (for better or worse).

IMO, the basis for a special enrollment period is that when the IRS decided to recognize them as spouses, their status as "tax dependents" under the IRS rules changed. It's like the "tax dependent" status change that happens when the HIPAA events occur. Before the event, you weren't a tax dependent, and after the event, you are. In effect, the IRS adopted the same-gender married couples as spouses.

Aside: I think this is a "same-gender" issue. In writing, I avoid a longer word if a shorter word is accurate, but in this case, it's the gender that's the same. Probably just getting too fussy in my old age.

[Chaz]

In the wake of Windsor, the IRS granted relief for plans to enroll same-sex spouses married prior to the date of the decision. That relief expired at the end of 2013.

In my client's circumstance, it's not the IRS tax treatment (which happened in 2013) that is triggering the new eligibility for enrollment, it's the employer changing the eligibility requirements in the plan (which is happening in June 2014).