Many companies will see modest new benefits-related costs as a result of today's ruling that struck down the Defense of Marriage Act. This is from David Mcann at CFO.com:
Today’s ruling removes that prohibition with regard to same-sex married couples in the states where such marriages are lawful: Connecticut, Delaware (as of July 1), Iowa, Maine, Maryland, Massachusetts, Minnesota (as of Aug. 1), New Hampshire, New York, Rhode Island (as of Aug. 1), Vermont and Washington, as well as the District of Columbia [and California within a month]....
The ACA provision under which employers must offer health benefits to employees and their dependents or pay a federal penalty doesn’t define “dependents” as including spouses [so companies will not be compelled to offer healthcare to spouses of any sex in 2014]. But following the court decision, children of same-sex spouses in the applicable states must now be eligible for coverage, notes Fredric Singerman, an attorney with Seyfarth Shaw....
Another potential cost hit, applicable to all employers, involves death benefits under defined-benefit pension plans and 401(k) plans. Some such plans stipulate that a death benefit is payable only to a spouse. Now, of course, more such payouts will have to be made.
It’s unclear so far whether death benefits will be payable to a same-sex couple that moves from a state where their marriage is legal to one where it isn’t. “If a couple moves from New York to Texas and the plan participant’s spouse passes away there, what happens to the death benefits?”...
Almost all employers will have to absorb some administrative costs. For example, until now the value of health benefits for same-sex spouses of plan participants and their dependents was taxable. That will still be the case in states where same-sex marriages are unlawful. But employers will have to “go back and rejigger the tax treatment for those people” in the jurisdictions where such marriages are allowed, Singerman says.
On the plus side of that issue, Singerman suggests that employers may be able to file for tax refunds. “It seems to me they should be able to. They’ve been paying FICA tax on those benefits, but under the decision it was unconstitutional for the IRS to treat same-sex spouses differently from opposite-sex spouses in this regard.” Refunds potentially will be available for taxes paid in the past three years, Singerman says.
There could be a fair-sized range of other administrative costs with respect to employees in the jurisdictions where same-sex marriages are legal. “If marital status affects the delivery of benefits to an employee’s same-sex spouse or that spouse’s child,” says human-resources consultancy Mercer, employers may need to: amend the benefits plan’s definition of “spouse”; reprogram tax-reporting systems; and update enrollment forms, distribution-election forms, tax notices, beneficiary designation forms, summary plan descriptions, and the like.
Other steps may involve revisiting domestic partner policies and evaluating whether DOMA “workarounds” adopted in the past are still needed to achieve human-resources objectives....
