Last month, the Supreme Court announced its decision in Obergefell v. Hodges, effectively preventing any state from prohibiting same-sex marriage and failing to recognize the benefits of marriage for same-sex spouses. For benefits purposes, Obergefell builds on the previous decision in U.S. v. Windsor and agency guidance following that decision. Prior to Obergefell, coverage provided to same-sex spouses was tax-free for federal tax purposes and for state tax purposes in states that recognized same-sex marriage. Now, for state tax purposes, the favored status of same-sex spouses applies in all states.
Obergefell does not specifically require plan sponsors to offer benefit plan coverage to same-sex spouses. However, due to a number of recent developments in the area of discrimination law, plan sponsors should assess potential risk of litigation before attempting to disqualify same-sex spouses. For FSA plans, HRA plans, and HSA bank accounts, same-sex spouses remain qualified individuals for purposes of expense eligibility and tax-free benefits.
Importantly, the coverage and tax rules remain the same for domestic partners. Employers are not required to offer coverage for opposite or same-sex domestic partners. Any coverage offered is optional and is fully taxable. It is generally expected that fewer employers will offer domestic partner health coverage going forward, now that the availability of coverage for same-sex spouses in every state has been secured.