In a landmark decision Wednesday, the U.S. Supreme Court struck down a provision of a federal law that denied benefits to married gay couples, sending human resources professionals, accountants and lawyers across the country scrambling to determine what changes will be needed to comply.
In a 5-4 decision, the justices invalidated a section of the 1996 federal Defense of Marriage Act – commonly referred to as DOMA – that has kept legally married same-sex spouses from receiving federal tax, health and retirement benefits.
“Basically what this means is that, if you have been married in a state that recognizes same-sex unions, no state can deny you those benefits, regardless of whether that state has legalized same-sex unions,” said Rebecca L. Sczepanski, an attorney who specializes in employee benefits for HunterMaclean in Savannah.
It’s based on the “full faith and credit” clause of the Constitution, which says that if something is legal in one state, other states have to recognize it, Sczepanski said.
“It’s the same concept as a state-issued driver’s license,” she said. “If you drive through South Carolina with your legally obtained Georgia driver’s license, they must acknowledge it as valid. But that doesn’t mean they are required to give you a South Carolina license if you don’t meet their criteria.”
Similarly, Wednesday’s ruling doesn’t render same-sex marriages constitutional – those decisions belong to the state, the court said. Instead it prohibits states from denying federal benefits to any legally married couple, regardless of sexual orientation.
And that, Sczepanski said, will have a ripple effect on everything from Social Security benefits and Medicare to health care benefits, income tax filing and estate taxes.
“There are more than 1,000 federal laws on the books that refer to the term “spouse,” she said. “Now the meaning of that term has changed and will have to be addressed.”
One major impact of the ruling, which takes effect immediately, will be in the way legally married same-sex couples file income taxes.
“As of this ruling, same-sex couples will be able to file joint returns, with same-sex spouses recognized as legal deductions on federal returns,” Sczepanski said.
“This could possibly open the door for same-sex couples to go back and amend open tax returns.”
The ruling will also affect requirements for companies offering health benefits to spouses, especially as the Affordable Care Act begins to kick in.
And it’s likely to send unmarried same-sex couples flocking to states that recognize theirs as a legal union.
“I imagine there will be a lot of couples suggesting ‘Why don’t we go to New York on vacation and get married?’ Why wouldn’t you, now that the federal benefits will be available regardless of your state’s law on same-sex marriage,” Sczepanski asked.
“At any rate, we are looking at major, significant changes. But it will be weeks, maybe even months before it all shakes out.”
David Paddison agreed.
“In the same way employers are struggling to quantify the impact of the Affordable Care Act, the recent supreme court ruling has corporate America wondering what the regulations and guidance from the federal agencies will look like and how it will affect the cost of their employee benefit plans,” said Paddison, president of Seacrest Partners Inc., a Savannah-based firm that offers employee benefits consulting.
“The nature of how it will affect employers at the individual level will be determined as we receive information on how federal regulations will coordinate with the positions each state has taken on the definitions of marriage.”
The extent of those changes will also depend on the employer’s current benefits package, he said, adding that 62 percent of Fortune 500 companies already offer same-sex benefits.
“So the ruling will have limited impact on those employers.”