HR provides employee benefits update in light of ruling, state legislation
9:57 a.m., Aug. 7, 2013--The U.S. Supreme Court ruled on June 26 that Section 3 of the Federal Defense of Marriage Act (DOMA) was unconstitutional. As a result of this and the July 1 effective date of Delaware’s Civil Marriage Equality and Religious Freedom Act of 2013, same-sex spouses may be eligible for favorable federal income tax treatment of health benefits, University of Delaware Human Resources (UD HR) reports.
This favorable tax treatment includes the ability to pay for a same-sex spouse’s health care benefits (medical, dental and vision) on a pre-tax basis and the University’s payment toward those benefits will no longer constitute imputed income.
Monitoring and planning
To the extent that education benefits (tuition remission, course fee waiver or tuition exchanges) are already pre-tax, for example, a qualified tuition reduction program, the University can now extend that pre-tax status to same-sex spouses recognized under state law and to the children of the same-sex spouse if the children are recognized as the employee’s dependents under state law, for example, a step-child.
This favorable tax treatment will apply only if a same-sex marriage is celebrated in Delaware or another state that permits same sex marriages (a “recognition state”) and the employee’s current “domicile” is Delaware or another recognition state. In most cases your home address will be your “domicile” for the payment of federal taxes. If the address in your University personnel file is not your “domicile” for federal tax purposes, contact UD HR Benefits.
Until further guidance is issued from the Internal Revenue Service, the University cannot modify the tax treatment of health care benefits provided to a same-sex spouse and/or dependents, if an employee lives in a state, such as Pennsylvania, that currently does not recognize same-sex marriages.
Recognition states are California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington and the District of Columbia.
If you elected health care benefits for yourself and your same-sex spouse during the recent open enrollment period and UD HR has a copy of your marriage license, and you live in Delaware or other recognized state, your coverage will be changed to a pre-tax election. UD HR Benefits will send a confirmation of benefits elections to you through campus mail. Review, sign and return the confirmation statement to the UD HR Benefits, 413 Academy Street, first floor.
If you are in a same-sex marriage and live in a recognition state but did not enroll your spouse and/or your spouse’s dependent children (up to age 26) in health care benefits during the recent open enrollment period, then the recent DOMA decision constitutes a “change in status” that permits you to enroll your same-sex spouse and/or dependent children on a pre-tax basis. If you would like to now enroll your spouse and/or dependent children in health care benefits, you must complete the family status and benefits change form and return it to UD HR Benefits no later than Aug. 31.
If you are currently in a Delaware civil union and have enrolled your partner and/or dependents in health care coverage, the tax treatment of your group health care benefits will not change as a result of the DOMA decision unless you convert your civil union to a same sex marriage. If you convert your civil union to a same-sex marriage before July 1, 2014, and currently reside in a recognition state, then your marriage will constitute a “change in status,” permitting you to enroll your same-sex spouse and/or dependents in your health care benefits on a pre-tax basis for the balance of this plan year.
In order to either enroll your same-sex spouse and/or dependents or (if already enrolled) obtain favorable Federal tax treatment for health care benefits for periods after your marriage, you must complete the family status and benefits change form, and provide the UD HR Benefits with a copy of a valid Delaware marriage license (or from another recognition state), birth certificates for any dependent children, and a copy of their Social Security cards. Remember, a family status and benefits change form must be received by UD HR Benefits within 30 days of your date of marriage.
By July 1, 2014, civil unions entered into in Delaware before July 1, 2013, will automatically convert to a same-sex marriage unless your relationship is in the process of dissolution, annulment or you are separated.