Arkansas Employers Must Offer Benefits To Same-sex Couples

Although Arkansas has a ban on gay marriage, many Arkansas employers must now manage certain retirement plans, health insurance plans and other workplace benefits to include same-sex couples legally married in a state or country that recognizes such marriages.

The U.S. Department of Labor announced Wednesday (Sept. 18) that a June 26 decision by the U.S. Supreme Court requires technical changes to the department’s Employee Benefits Security Administration. The EBSA change apply to “plans, plan sponsors, fiduciaries, participants and beneficiaries on the decision’s impact on the Employee Retirement Income Security Act of 1974,” noted the DOL statement.

One of Arkansas’ largest employers has already opened up benefits to same-sex couples. Wal-Mart recently announced an expansion of coverage eligibility for any spouse or domestic partner of a full-time employee which includes, medical, dental, a new vision option, critical illness and accident plans. Domestic partners will be eligible beginning in 2014, during the enrollment period starting Oct. 12.

Wal-Mart joins a list of Fortune 500 companies including Costco, Ford, Home Depot and Best Buy to offer health care benefits to same-sex partners. The civil rights group, Human Rights Campaign, estimates 62% of Fortune 500 companies have already done so. HRC said inclusion efforts have increased from 34% in 2002.

RECENT LEGAL HISTORY
The U.S. Supreme Court decision in the Windsor v. U.S. case found the Defense of Marriage Act (DOMA) to be unconstitutional. The case involved two women from New York, Edith Windsor and Thea Spyer, who met in 1963 and were legally married in Canada in 2007. Spyer died in 2009. Windsor was legally blocked from claiming an estate tax exemption for surviving spouses because federal law (DOMA) did not recognize same-sex marriage as a qualifying exemption.

In a 5-4 vote, the Court overturned DOMA.

“DOMA’s principal effect is to identify and make unequal a subset of state-sanctioned marriages,” noted a portion of the majority opinion. “It contrives to deprive some couples married under the laws of their State, but not others, of both rights and responsibilities, creating two contradictory marriage regimes within the same State.”

In his dissent, Justice Antonin Scalia said the issue should not have been before the Court.

“This case is about power in several respects. It is about the power of our people to govern themselves, and the power of this Court to pronounce the law. Today’s opinion aggrandizes the latter, with the predictable consequence of diminishing the former.”

‘HISTORIC STEP’
According to the DOL, the changes will be applied to approximately 701,000 private sector retirement plans, 2.3 million health plans and other plans that provide benefits to more than 141 million Americans. Collectively, these plans hold more than $7.3 trillion in assets.

“This decision represents a historic step toward equality for all American families, and I have directed the department’s agency heads to ensure that they are implementing the decision in a way that provides maximum protection for workers and their families,” Secretary of Labor Thomas Perez said in the statement. “The department plans to issue additional guidance in the coming months as we continue to consult with the Department of Justice and other federal agencies to implement the decision.”

Changes from the Court’s decision are expected to require changes to more than 1,000 federal laws regulating portions of the Internal Revenue Code, the Employee Retirement Income Security Act (ERISA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Health Insurance Portability and Accountability Act (HIPAA) and the Family Medical Leave Act (FMLA).

IRS INFORMATION
The Internal Revenue Service has issued new rules, and has also posted a FAQ page for same-sex couples.

“The IRS has a general rule recognizing a marriage of same-sex spouses that was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage of two individuals of the same sex even if the married couple resides in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages,” notes a portion of the opening answer on the FAQ page.

According to the National Law Review, plan sponsors were to begin complying with the changes effective Sept. 16, 2013.

“As of September 16, 2013, employers must stop imputing income for health benefits for same-sex spouses. If applicable (assuming the existence of a cafeteria plan), employers must also switch from after-tax to pre-tax premiums for same-sex spouse health benefits,” noted the NLR guidance posted Wednesday.

ARKANSAS BAN
An ongoing effort to end Arkansas’ ban on gay marriage hit a roadblock on Tuesday (Sept. 17) when Arkansas Attorney General Dustin McDaniel rejected a proposed amendment – The Arkansas Marriage Equality Amendment – submitted by Little Rock resident Jennifer Pierce.

“Having analyzed your proposed amendment in light of the foregoing precepts, I conclude that I must reject your proposal due to deficiencies in the ballot title and in your proposal’s text,” noted McDaniel’s opinion. “The ballot title is also deficient because it makes no attempt to summarize for the voter what effect your proposal would have on existing law.”

Arkansas’ ban on gay marriage was enacted when 75% of voters supported Amendment 83 in the 2004 general election. Arkansas Gov. Mike Beebe, a Democrat, opposes same-sex marriage.