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Will a Supreme Court decision about same-sex marriage change anything for employee-benefits practitioners?


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This summer, we expect decisions from the Supreme Court of the United States on whether a State must provide same-sex marriage (if the State provides opposite-sex marriage) and whether a State must recognize a same-sex marriage that was made under another State's law.

These decisions matter greatly to someone who now must travel to be sure of making a same-sex marriage, and to someone who faces uncertainties about whether a court of a State in which he or she is domiciled or resides would recognize his or her marriage made under another State's law.

But for employee-benefits practitioners, I wonder if the news already happened. After the 2013 decision and administrative-law guidance, an administrator of an employee-benefit plan that has any provision that turns on the presence or absence of a spouse, has to be ready to apply the provision knowing that a same-sex marriage is at least possible. That's so even if the plan's sponsor and participants are so geographically limited that everyone resides in a State that neither provides nor recognizes same-sex marriage; an ERISA-governed plan usually recognizes a marriage that was valid under the law of the State in which it was made. (We recognize that church plans and governmental plans have quite different paths.)

Are there follow-on effects of 2015's same-sex marriage decisions that employee-benefits practitioners would need to do something about?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Please take note that, with respect to defined benefit pension plans, despite the fact that the IRS regulations do not require plans to reach back before the issuance of the Windsor decision, a suit has been filed demanding qualified pre-retirement survivor benefits in a case where the participant died shortly before the Windsor decision was issued. The suit is based on the Windsor decision establishing that the relevant provisions of DOMA were, from inception, unconstitutional. Remember - the IRS not requiring retroactive application of the Windsor decision cannot prevent individuals from suing for benefits asserted to be due under ERISA.

Which is not to say that sponsors must amend their plans beyond what is required by law and regulations, just that litigation may ensue.

Always check with your actuary first!

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Stacey Schuett's complaint against FedEx is a reminder about some difficulties that come from uncertainty about law.

In Windsor, the Supreme Court decided that a statute enacted in 1996 never was law because it is contrary to the Constitution. Although the IRS can say it won't tax-disqualify a plan for having treated a same-sex spouse as not a spouse for some plan-administration acts done before summer 2013, a participant's surviving spouse may claim she was a spouse, and is entitled to the rights an ERISA-governed plan must provide for a spouse.

Could the Supreme Court's summer 2015 decision also lead to some "effective date" and transition issues?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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There is a statute of limitations for filing a claim for benefits which is the s/l for the state law which is most similar to a claim for benefits under ERISA. For example if the most similar s/l is for breach of contract then the s/l for the claim will be the s/l for breach of contract in the state where the participant resides.

Most s/l are no more than 4-6 years.

mjb

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Imagine that in November or December 2014 an employee tried to include her same-sex spouse in group ("self-insured") health coverage. The employee had married her spouse in a State that provides common-law marriage but purported to preclude same-sex marriage. Mistakenly believing that the same-sex spouse was not its employee's spouse, the employer denied the requested enrollment.

After the Supreme Court's June 2015 decision, suppose it turns out that the U.S. Constitution precluded the State from not providing common-law marriage for a same-sex couple if the State provides common-law marriage for an opposite-sex couple. So the employee was married when she requested her spouse's enrollment.

In July, should the employer allow a spouse enrollment retroactive to January 1, 2015?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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How would the supreme court's decision - either way - impact the health insurance issue? Just because the supreme court holds that a state may not constitutionally prohibit same-sex marriages, so what? Haven't we had that issue for so long as we've had same-sex marriage: Is there any law that prohibits an ERISA-governed health plan from distinguishing between same-sex and opposite-sex marriages?

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While it's so that an ERISA-governed health plan might specify which spouses are eligible and which aren't (and that those provisions are not necessarily a violation of a civil-rights law), many plans don't have clear provisions on this point.

Imagine that the employer/administrator's decision in my hypo was not about applying any detailed plan text, but instead was the employer's interpretation of the word "spouse". If that is the hypo's key fact, should the employer/administrator:

Allow a spouse enrollment retroactive to January 1, 2015?

Or find that the administrator had acted in 2014 in good faith, finding a non-spouse on what the administrator then believed was relevant law concerning such a status question.

If the employer/administrator validates its previous decision, should it treat the fact of the Supreme Court decision as though it were a change in whether the participant has a spouse, and allow an election for a coverage period of August through December?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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