Rules and Exceptions When Providing Benefits to Same Sex Couples

January 13, 2020

Employers who offer benefits to spouses must also offer them to same-sex couples though there are exceptions.

The U.S. Supreme Court ruled in 2015 that the rights of same-sex couples are protected under the due process and equal protection clauses of the Fourteenth Amendment to the U.S. Constitution. Therefore, employers who offer benefits to employees’ spouses also must extend those benefits to those with same-sex spouses.

However, there are some exceptions as to when you must offer benefits to spouses and that’s where it can get tricky.

In addition, some employers offer domestic partner benefits to same-sex couples. Many employers are discontinuing domestic partner benefits because they are harder to administer and they have negative tax implications.

Here are some popular benefits and who is eligible for each:

Health Insurance

The Affordable Care Act (ACA) requires all employers with 50 or more full-time equivalent employees to offer health insurance. However, the law does not require employers — large or small — to offer these benefits to employees’ spouses. But if employers do, and the insured employee is forced to leave their job, the employee and a covered spouse can continue health coverage through COBRA, regardless of sexual orientation.

The exception to the law is employers who self-fund their health benefits. Self-funded coverage is not technically considered health insurance. It’s an employee benefit and is covered under ERISA (Employee Retirement Income Security Act) laws and regulations. Therefore employers are not required by ACA law to provide coverage for same-sex spouses.

Leave Benefits

The Family and Medical Leave Act (FMLA) requires covered employers to provide eligible employees with unpaid, job-protected leave for up to 12 weeks for qualified medical and family reasons, including personal or family illness, family military leave, pregnancy, adoption, or foster care placement. As of 2015, the Department of Labor designates same-sex spouses as legal spouses. However, FMLA rules do not apply to small employers (those with fewer than 50 employees).

Health Savings Accounts

Employees who have a Health Savings Account, Health Reimbursement Account (combined with a high deductible plan) or Flexible Spending Account can set aside money on a pre-tax basis to pay for qualified medical expenses.

Employees who contribute to these types of savings accounts also can use the benefit to pay for their spouse’s medical expenses. Both opposite-sex and same-sex spouses can contribute up to the maximum family contribution.

Retirement Plans

Retirement plans, such as 401(k) plans, must provide survivor annuities when an employee is married or offer the participant’s account balance at death to a spouse.

The exception is government or church plans. Neither is required to provide a qualified joint and survivor or qualified pre-retirement survivor annuity, nor must spousal benefits be provided at death. These government and church plans also are not required to provide these benefits to same-sex spouses.

Workers’ Compensation

Workers’ compensation is accident insurance provided by employers, and most states require employers to carry or self-fund this coverage for their employees. Workers’ compensation pays benefits to a same or opposite sex spouse if the employee dies on the job.