The Supreme Court’s decision establishing same-sex marriage recognition, isn’t just a cultural shift. It’s also likely to have an impact on employers and employee benefits.

The Supreme Court’s Obergefell v. Hodges decision, establishing same-sex marriage recognition, isn’t just a cultural shift. It’s also likely to have an impact on employers and employee benefits.

All 50 states must now grant marriage licenses to same-sex couples and recognize the marriages of such couples married elsewhere.

Married same-sex employees are also immediately entitled to the same rights and benefits available to heterosexual married couples.

Benefits change

Every employer in the country must now provide same-sex married couples the same benefits they offer heterosexual married employees. If available to other employees, employers must offer full spousal benefits, including pension survivor annuity and survivor death benefits, along with spousal and (if relevant) family dependent health care coverage to all married employees.

Employers everywhere will also potentially have new tax reporting issues. Those with employees in states with income taxes will have further changes, since domestic partner benefits were generally not eligible for tax-exempt treatment under state laws.

Some employers have provided employee survivor, death and health benefits for domestic partners as a way to put their LGBT employees (and heterosexual couples who choose not to marry) on equal footing with their heterosexual married employees.

Can these employers eliminate those benefits now that the Supreme Court has made marriage a nationwide option for members of the LGBT community? Yes.

Some employers have reported experiencing adverse selection on health care coverage because of offering domestic partner health care benefits, and eliminating these benefits certainly will reduce the administrative headache of getting proof of the relationship. At least one state, some smaller governmental units, and companies like Verizon and Delta Airlines have already eliminated future (or all) domestic partner benefits.

Weighing the options

Because eliminating such benefits may force domestic partners to either get married or lose benefits, a number of other employers have publically stated they will be keeping the domestic partner benefit option for the time being.

Some companies had other reasons to offer domestic partner benefits. For example, older heterosexual employees in a committed relationship could obtain benefits without being forced into a marriage that could jeopardize their Social Security. Additionally, some LGBT couples want to maintain their privacy and thus might still prefer to access benefits via private communication with their HR department without a public marriage.

Employers need to approach changing their employee benefits carefully. Those who decide to terminate domestic partner benefits may need to offer COBRA (or its state equivalent) for continuation of health care benefits. They should also probably allow a set period of time for employees to effect changes they wish or need to make for retaining very valuable benefits.

Employers need to consider carefully if continuing or eliminating domestic partner benefits will be the right choice. Employers should obtain employee benefits/employment law advice as they determine how and when they should change their employee pension/retirement, health, cafeteria and other employee benefit plans.

Originally published by