The Supreme Court’s recent ruling that the foundational provisions of the Defense of Marriage Act (DOMA) are unconstitutional is going to trigger a major overhaul of federal rules governing the administration of employee benefits and payroll. And with the striking down of the law prohibiting federal recognition of same-sex marriage, benefits managers must also wait for the inevitable cascade of subsequent legal rulings and IRS policy changes. And since the ruling takes effect immediately, many employers may need to amend their definition of “spouse” within the context of benefits plans.
Tax reporting programs, enrollment forms, tax notices, beneficiary designation forms and other similar papers will also need to be updated. Employees affected by the ruling will need to amend W-4 forms and update their tax filing status if they are legally married.
“… (Striking down DOMA) frees employers from a number of financial and administrative burdens, and we applaud the court’s ruling,” James A. Klein, president of the Washington-based American Benefits Council, said in a statement. “Of course, this ruling brings new challenges, as employers now must be mindful of significant variations in state laws regarding same-sex couples.”
And while companies with more inclusive policies governing things, such as COBRA eligibility, retirement plan beneficiaries, eligibility for health insurance and the like, will have less paperwork to do, there will almost certainly be new IRS guidelines and more lawsuits ahead to deal with confusing issues such as state-to-state gray areas.