Update on Same-Sex Marriage and Civil Unions

John GarnerDMEC News

Earlier this year, this blog reported that Hawaii and Illinois had passed legislation recognizing civil unions.  Since then, Delaware and Rhode Island have also recognized civil unions and New York has recognized same-sex marriage.

Delaware’s law, like Hawaii’s, will be effective January 1, 2012.  The new laws in New York and Rhode Island have already taken effect.

These new laws will affect both coverage under health benefit plans and state family leave laws, as well as many other laws.  Employers should review their employee benefit plans to comply with these new laws.

Federal law does not recognize civil unions, so COBRA group health plan continuation does not apply. Many employers that enroll a civil union partner in the company’s health plan choose to permit partners to extend coverage in a manner that is consistent with COBRA coverage.

Employers with health plans that provide coverage for civil union partners and same-sex spouses will generally need to tax the employee on these benefits. Since civil unions and same-sex marriages are not recognized under federal law, employers must impute income to the employee for federal income tax purposes equal to the fair market value of the coverage given to an employee’s partner, unless the partner otherwise qualifies as a “dependent” of the employee pursuant to Section 152 of the Internal Revenue Code. Also, the employee may not make pre-tax contributions to a Section 125 cafeteria plan on behalf of a non-dependent partner. Therefore contributions for the partner should be after-tax. Furthermore, an employee may not receive reimbursement for expenses of a non-dependent partner from flexible spending accounts (FSAs), health reimbursement accounts (HRAs) or health savings accounts (HSAs).

In addition to New York, the following states recognize same-sex marriages:  Connecticut, Iowa, Massachusetts, New Hampshire, Vermont and the District of Columbia. 

California recognizes some same-sex marriages.  On May 15, 2008, the California Supreme Court ruled that same-sex couples have the right to marry .  On November 4, 2008, California voters approved Proposition 8, which amended the California Constitution to define marriage as between one man and one woman.  A federal district judge has ruled that the same-sex marriage ban in Proposition 8 violated the equal protection provisions of the U.S. Constitution. Pending appeal, that decision will not be enforced. Same-sex marriages performed before November 5, 2008 remain valid.

In addition to the states mentioned above, New Jersey also recognizes civil unions.

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