On May 15, California’s high court ruled that same-sex couples must be permitted to legally marry. However, on June 3, an initiative banning same-sex marriages received enough voter signatures to qualify for the November 4 ballot.

What happens after the fall vote is up for speculation, but since the Supreme Court ruling took effect June 17, employers need to decide how to handle health care benefits for same-sex spouses, experts say.
Most large private employers with employees in California have a choice as to whether they are going to allow same-sex spouses to qualify for health care benefits, says J.D. Piro, head of Hewitt Associates’ health law consulting practice.

Most large private employers have health care plans that are governed by the Employee Retirement Income Security Act, which says that states can’t regulate employer benefit plans. Therefore, employers that do not want to offer health care benefits to same-sex spouses could argue that they don’t have to under ERISA, Piro says.

Similarly, consultants say large employers with self-funded plans may be able to argue that they don’t have to recognize same-sex spouses when it comes to health care benefits under the 1996 Defense of Marriage Act, which defined marriage as a legal union between a man and a woman.

Whether employers would win these arguments would likely be decided in litigation, Piro says.

Employers need to review their plan documents and make sure they are comfortable with how they define a spouse, says Joanne Hustead, senior health compliance specialist at the Segal Co.

“Most plan documents talk about a legal spouse as the person you are married to under applicable law, and there was never a need to define that,” she says.

The California ruling also has implications for employers outside the state, because there is no residency requirement for same-sex couples to get married. This means employees could get married in California, then return to their home states and ask their employer for health care coverage for their same-sex spouse.

While a handful of states, like New York, have agreed to recognize same-sex marriages, the majority of states have approved laws or amended their constitutions to say that they are not bound to recognize out-of-state same-sex marriages, Piro says.

“It’s unclear what happens in these cases,” Piro says. “No one has pushed this issue yet.”

Employers nationwide need to be clear on where they stand in regard to same-sex spousal benefits, Hustead says. Companies providing health care benefits to same-sex spouses also need to make sure they are clear on the tax implications for those individuals.
 
If the ruling stands, same-sex spouses will get tax deductions on a state level. But since federal law does not recognize same-sex marriages, these individuals don’t get federal deductions for being married, Hustead says.

Employers have to make sure they are taking out the right amount of deductions and communicating these nuances to employees, she says.

“There is nothing clear about this issue because of the interplay with federal and state law,” Hustead says.