May common law spouses be specifically excluded from welfare and pensi

[EGB]

May common law spouses be specifically excluded from welfare and pension plans? For example, assume Georgia recognizes common law marriages. Would it be allowable to have a health or pension plan maintained by a Georgia company exclude, by definition, spouses through common law marriage?

[IRC401]

If the marriage is recognized under state law, then the joint and survivor annuity rules should apply regardless of why the marriage is valid.

[david rigby]

To my knowledge, there is no specific definition of "spouse" in the Internal Revenue Code, so the answer by IRC401 would seem to make sense, meaning a default to state law.

However, but there may be another factor to consider. Congress recently passed the Defense of Marriage Act (I think that is the title), the primary purpose of which is to affirm that, for federal law purposes, marriage is defined as between one woman and one man. (Hard to believe that we need a law to tell us that.)

That statute might have some relationship to this question. Can anyone help here?

[Guest Patricia Ibbs]

I write for self-funded health plans. My definition of "spouse" is "the person recognized ... under the laws of the state where the covered Employee resides." Then I reserve the right for the Plan Administrator to require documentation proving a "legal marital relationship."

Therefore, if the state recognizes a common law marriage, the plan does also. However, in documenting the relationship, I suggest the Plan Administrator have the parties fill out, sign and notarize an Affidavit of Marital Status. It is my understanding that once this is signed and notarized, then the couple is truly married and must get a divorce to dissolve the relationship. This formalizes the relationship.

[Kirk Maldonado]

I think that all of the above replies are non-responsive.

The question is whether the plan can be drafted in a fashion so as to refuse to provide benefits to a common law spouse. The question is not whether a common law spouse is a valid spouse under state law.

I'm not aware of any reason why the plan could not be drafted in that fashion. I think that the plan can define the eligibility conditions in whatever fashion it wants, as long as it does not violate any specific prohibition on discrimination.

None of the above responses cited any law that says that a plan cannot discriminate against common law spouses. If somebody is aware of any such rule, I'd be very appreciative if they could bring it to our attention. (I'm not saying that there are no such laws; I'm just not aware of the existence of any.)

[EGB]

Kirk - thanks! You are on point - I want to know about excluding common law marriages in states that recognize them.

In Scott V. Board of Trustees, 859 F.2d 872 (11th. Cir. Ala. 1988), the court held that it is against Alabama's public policy to deny common law marriages the same status as ceremonially solemnized marriages. In this case, an indemnity policy excluded common law spouses from coverage. However, the case never mentions ERISA. Because of this case, according to a contact of mine at Blue Cross Blue Sheild of Alabama, BCBSA does not allow such exclusions in its health plans and will not administer a self-funded plan with such an exclusion.

Despite any decisions like Scott, there are some who argue you can exclude common law spouses, under ERISA, even in a state where there is such a holding. Those who argue this have not been able to present me with any authority for this, except to analogize the situation to the statute of limitations under ERISA (ie, defer to state law, unless the parties have otherwise contractually agreed).

I happen to know about the Scott case because I am in Alabama. I have no idea what other cases may be out there in other states.

[Kirk Maldonado]

Beth:

My position is that state law on this topic is preempted by ERISA. Thus, self-funded plans can be designed without regard to the state law.

[EGB]

Kirk-

Why does it matter if it is self-funded or not?

If this is preempted by ERISA, what does ERISA or the federal common law say about this issue? I can understand a general preemption argument, but I don't know what the rule would be absent state law.

I came across a few random cases the other day. For example, in Blessing v. Deere & Company, 985 F.Supp. 899 (S.D. Iowa), the court stated "The issue of what constitutes a common law marriage is not expressly governed by ERISA; the Court therefore applies federal common law. In applying federal common law, the Court looks to Iowa law for guidance on this issue. . . . The Court may properly apply Iowa's state law on this issue, because it does not conflict with ERISA or

its underlying policies."

As another example, in Bond v. Trustees of the Sta-Ila Pension Fund, 902 F. Supp. 650 (D. Maryland), the court speaks of preemption in this context and states the following: "The Supreme Court has also warned, however, that even under ERISA claims, we 'must presume that Congress did not intend to pre-empt areas of traditional state regulation.' Metropolitan Life Ins. Co. v. Massachusetts . . . . In the instant case, the definition and regulation

of marriage is a traditional area of state authority. Following the approach of Metropolitan Life, this Court will presume that Congress did not intend to pre-empt this area of law. Plaintiff has provided no authority to

rebut this presumption, nor has plaintiff provided this Court with authority suggesting what 'federal common law of marriage' would be."

[Guest]

I'll let Kirk field the self-funded/insured issue, but because I represented the Pension Plan in the Bond case that you cited, I wanted to put in my 2 cents worth. In Bond, the issue was whether Mrs. Bond was entitled to the J&SA under 205(b)(3)--she and the participant had been married for less than a year, but had lived together for a much longer time. The state where they lived doesn't recognize common law marriage, so the Trustees said no J&SA. The Trustees were perfectly willing to abide by state law, and they weren't trying to impose their own definition. I think that if the plan is self-funded and if there's a dispute about a plan provision that is subject to a statutory provision that requires coverage of, or a benefit for, a "spouse," the plan would find it difficult to enforce a plan definition that excludes someone who is a "spouse" under state law. On the other hand, if the dispute is about a plan provision that is not subject to a statutory provision that refers to a "spouse," the plan MIGHT be able to limit the benefit or coverage to those who fit a plan definition that excludes a common law spouse. However, even under the latter scenario I think there'd be litigation and unless the plan sponsor really wants to invest in attorneys' fees, I'd recommend against it.

[Kirk Maldonado]

Beth:

I think you got sidetracked somewhat in your reasoning.

Specifically, the question is one of plan design issues; not whether state law or federal law determines whether a party is married or not.

I believe that the state laws limiting plan design issues (e.g., mandating that all common law spouses be treated like regular spouses) are preempted by ERISA.

ERISA does not preempt state insurance laws, so that fully insured plans have to comply with state laws. Conversely, self-funded plans are exempt from state insurance laws.[Edited by Kirk Maldonado on 08-02-2000 at 05:40 PM]