To the dismay of many benefits administrators and employees, Section 3 of the Defense of Marriage Act (DOMA) limits marriage for federal law purposes to a relationship between a man and a woman. As a result of DOMA, same-sex spouses do not have the same rights under federal benefits or income tax law as opposite-sex ones. For example, 401(k) plans that do not offer an annuity must provide that upon a participant's death the account is to be paid to the participant’s spouse, unless the spouse consents to another beneficiary. Because of DOMA, this protection does not apply to same-sex spouses. And under Sections 105 and 106 of the Internal Revenue Code, if an employer provides health benefits to its employees’ spouses, both the value of the spouses’ coverage and actual benefits received are excluded from employees’ income. Again, under DOMA, these exclusions do not extend to same-sex spouses, and the value of the coverage often must be reported as taxable income to the employee.

On February 23, 2011, however, United States Attorney General Eric Holder sent a letter to Speaker John Boehner (DOJ Letter) informing him that the administration has determined that Section 3 of DOMA, as applied to same-sex couples who are legally married under state law, violates the Equal Protection Clause of the United States Constitution.

The constitutionality of DOMA has been challenged on this ground in several recent lawsuits, including two currently pending in the Second Circuit (which includes Connecticut, New York and Vermont.) Attorney General Holder’s letter to Speaker Boehner states that in the administration’s view Section 3 of DOMA should be analyzed under a “heightened scrutiny” rather than “rational basis” standard of review. The letter concludes that the rationales for DOMA cannot survive analysis under this heightened standard. Accordingly, the letter states that the Department of Justice (DOJ) will no longer defend DOMA in the two cases venued in the Second Circuit.

Effect of DOJ Letter of Employee Benefit Plans

The DOJ Letter states that the Executive Branch and Federal Agencies will continue to enforce DOMA “unless and until Congress repeals Section 3 or the judicial branch renders a definitive verdict against the law’s constitutionality.” Therefore, employers should continue to administer their plans and report taxes as required by DOMA.

Additionally, even if DOMA is eventually repealed or “definitively” declared unconstitutional, employees in domestic partnerships or civil unions will continue to be treated as having dependents who are not spouses. It would require passing additional federal law addressing the benefits and tax status of these categories, or a much broader Equal Protection argument than is set forth in the DOJ Letter, to apply different benefits or tax status to these non-spouse categories.

Finally it is not readily apparent what the DOJ means by a “definitive” finding of unconstitutionality. If the Second Circuit determines that DOMA is unconstitutional, could or should employers with employees in that Circuit exclude the cost of same-sex spouse health coverage from employees’ income? This issue will require additional analysis if the Second Circuit, or another federal circuit, rules Section 3 of DOMA unconstitutional.


Despite the administration’s position in the DOJ Letter, employers providing benefits to same-sex spouses should continue to administer their plans consistently with DOMA. But stay tuned for more developments. A copy of the DOJ Letter can be accessed here.