Section 3 of the Defense of Marriage Act (DOMA) generally provides that for purposes of applying federal law, only heterosexual marriages are recognized, thus preventing same-sex couples from obtaining federal benefits and being treated as married for federal law purposes.

On June 26, 2013, the Supreme Court held that Section 3 was unconstitutional as a deprivation of equal protection and due process under the Fifth Amendment.  Specifically, in the case of United States v. Windsor, the Court found that it was unconstitutional for DOMA to deny, for federal law purposes, state-recognized valid same-sex marriages.  For federal tax and benefit law purposes, including ERISA’s spousal benefit provisions, state-recognized same-sex marriages will have to be treated as bona fide marriages.

Key Employee Benefit Plan Impacts

Generally, plans will have to extend to employees and spouses in state-recognized same-sex marriages the same benefits, and provide the same federal income tax treatment, that federal law mandates be provided to employees and spouses in opposite-sex marriages.  Pending further developments, some of the key impacts include:

Retirement Plans

  • Providing qualified joint and survivor annuities and qualified preretirement survivor annuities for employees and same-sex spouses participating in defined-benefit pension plans, money purchase pension plans and other qualified plans subject to annuity requirements.
  • Making same-sex spouses the default beneficiaries for death benefits under 401(k) plans and other defined contribution plans not subject to the annuity requirements.
  • Treating same-sex spouses as spouses for purposes of the required minimum distribution rules, the rollover rules and qualified domestic relations orders.

Welfare Plans

  • Treating same-sex spouses as qualified beneficiaries entitled to continuation coverage rights under COBRA.
  • Providing same-sex spouses equivalent federal income tax treatment with respect to health insurance premiums.  Before, the value of a same-sex spouse’s health benefits coverage generally was treated as taxable income.  Now, it will be subject to the same exclusion available to opposite-sex spouses.  In addition, employees will be able to pay their portion of the premiums for spouses’ coverage on a pre-tax basis under a Section 125 Plan.
  • Extending coverage under a group health plan to same-sex spouses pursuant to HIPAA’s special enrollment requirements.

Open Issues

The Windsor decision, however, leaves open many important questions, including:

Which state law applies for federal law purposes?The Court did not decide whether there is a right under the United States Constitution for same-sex couples to marry, either on due process or equal protection grounds.  Thus, states remain free either to allow same-sex marriages, as 13 states plus the District of Columbia do or soon will,[1] or to limit marriage to heterosexual relationships, as 35 states have done, including Ohio (two states are silent on the matter).  The Court also did not decide whether states that do not provide for same-sex marriages will have to grant recognition to same-sex marriages entered into in states that do.  Section 2 of DOMA provides that states are not required to provide such recognition (the constitutionality of that provision was not before the Court in Windsor, so it remains in effect, subject to future litigation).  Thus, a key question is whether same-sex marriages validly performed in one state are to be recognized under federal law and for employee benefit plan purposes in another state (such as where the participant may work or the couple may reside).  For example, if a same-sex couple married in Massachusetts moves to Ohio, under current law, Ohio would not recognize that relationship but it is unclear whether such a couple would continue to be recognized as married for federal tax and benefit law purposes.  This will complicate benefit plan administration for virtually all employers, but especially those with locations in multiple states.

Will there be retroactive application? In addition, the Court did not provide clear guidance regarding the extent to which the Windsor decision has a retroactive effect. Generally, however, when a statue is struck down as unconstitutional, the impact is retroactive to the date the statute was enacted.  Retroactive application of the Windsor decision could permit same-sex couples to seek federal income tax and FICA refunds for prior years, and employers to seek FICA refunds, with respect to the income tax exclusion for health care coverage provided to the spouse.  More troublesome for plan sponsors, though, is if the Windsor decision is fully applied on a retroactive basis, then it is possible that spouses in valid same-sex marriages may have retroactive claims for plan benefits, including benefits previously paid to other parties.

What is the scope of employer flexibility regarding rights and benefits for same-sex spouses?  Generally the Employee Retirement Income Security Act and the Internal Revenue Code allow employers to define eligibility requirements for their plans. As described above, though, Windsor appears to require that where federal law mandates that a spouse be provided a right or receive a benefit, the plan must extend the right or benefit to a state-recognized same-sex spouse.  While the contours of the requirements are not entirely clear, plan provisions regarding the definition of “spouse” and “marriage” should be reviewed and updated in light of Windsor.  In addition, just as before Windsor, employers retain flexibility through plan design to extend spousal benefits to all same-sex couples and domestic partners, if they desire.  Such an approach might permit a relatively uniform benefit design across state lines, though not a uniform federal or state tax treatment.


The Windsor decision impacts more than 1,000 federal laws and it will take time for the regulatory agencies and courts to work through all of its direct and indirect repercussions.

Further litigation and guidance from the regulatory agencies will eventually address these issues.  In the meantime, employers should confer with legal counsel, consultants and other advisers regarding the impact on their plans and any necessary revisions to their plan documents and administrative procedures to reflect the Windsor decision.