In Obergefell v. Hodges, the Supreme Court held that states may not deny same-sex couples the right to marry, finding that doing so violates the Fourteenth Amendment. Writing for the five-justice majority, Justice Kennedy concluded that, “[T]he right to marry is a fundamental right inherent in the liberty of the person, and under the Due Process and the Equal Protection Clauses couples of the same-sex may not be deprived of that right and that liberty.” Obergefell v. Hodges, 135 S. Ct. 2584, 2604 (2015).
Qualified Plans. The decision will not affect qualified retirement plans. Because those plans are governed by federal law, the Court’s decision in Windsor effectively required those plans to provide same-sex spouses the same rights and benefits as opposite-sex spouses.
Health Plans. For self-insured health plans governed by ERISA, however, the decision may prompt sponsors to consider changes in whether coverage is offered to domestic partners and, for sponsors who do not currently offer coverage to same-sex spouses, whether such coverage should be offered.
Coverage of Domestic Partners. Employers that offer domestic partner benefits face issues not faced by employers who do not, including defining who is an eligible domestic partner and issues relating to the taxation of such benefits. Employers considering elimination of domestic partner coverage will want to consider:
- whether continuing to offer such benefits provides a competitive advantage in recruiting that outweighs the costs, including administrative costs;
- whether equal protections issues are raised if an employer covers same-sex domestic partners but not opposite sex domestic partners; and
- the effect eliminating such benefits will have on employee relations.
Employers that decide to eliminate domestic partner coverage should communicate the decision as soon as practicable and may want to consider grandfathering currently covered domestic partners for some period.
Coverage of Same-Sex Spouses. The Obergefell decision by itself does not require plan sponsors to extend coverage to same-sex spouses (although state insurance law may require such coverage for an insured plan). No federal law requires coverage of same-sex spouses and state laws requiring such coverage would be preempted by ERISA. A plan, however, will want to consider the risks of covering opposite-sex spouses but not same-sex spouses, particularly in light of the EEOC’s recent decision that Title VII’s prohibition on sex discrimination extends to discrimination based on a individual’s sexual orientation.