DOMA Decision and Consequences

07/02/2013

Gay couples have long been treated as second-class citizens under the law.  However, in recent times the tide has been changing.  More and more states are now recognizing the right of a gay couple to marry.  And recently, the Supreme Court of the United States overturned that portion of a federal law known as the Defense of Marriage Act (DOMA) which states that a marriage can only be between a man and a woman.

So where exactly are we at now that the Supreme Court has struck down DOMA. The Supreme Court's ruling makes it clear that married gay couples living in states that recognize their marriage will immediately gain access to more than 1,000 federal benefis, like Social Security and family leave rights. Less certain is how couples living in the remaining states that do not recognize same-sex marriages (which includes Missouri) will fare.

The uncertainty exists because federal agencies generally defer to the states to determine a couple’s marital status. Some agencies look to the laws in the state in which a couple now live while others look to those in the state in which the couple were married.  This means that the Supreme Court left undecided how, for example, a Missouri same-sex couple will fare if they got married in a state that recognizes same-sex marriages, but lives in a state that does not.

For same-sex couples living in states that recognize their marriage, here is a brief overview of how they may be affectred by the Supreme Court's decision: 

1.  Social Security

Same-sex couples living in states that recoginize their marriage can apply for Social Security benefits on their spouses’ earnings records, as well as survivor benefits. The Social Security Administration typically looks to the states to determine whether a person is married, which could create problems for couples that move to a state where their marriage is not recongized.

2.  Federal Inocme Taxes

Married couples living in states where same-sex marriage is recognized will be able to file joint federal returns. That should save some couples money, especially when one person earns much less or does not work at all. High-income couples with two working spouses may pay more.

Additionally, filing jointly can cause even lower-income couples to become ineligible for certain tax savings like the earned-income tax credit. Ultimately, the tax consequences will be based on where couples live, their income and their particular circumstances.

What remains unclear is whether same-sex couples married in states where their unions are legal could file joint federal returns if they moved to a state where they are not. On this issue, we still need to what for guidance.

3.  Health Insurance Coverage. 

Many more couples, especially federal workers, will now be able to add a same-sex spouse to their health plan. Many private employers extended these benefits, even though the law did not require them to. What is not clear is whether workers will be able to add a spouse right away.  Normally, a family member can be added only within 30 days of a qualifying event, like a marriage or the birth of a child, or during the employer’s open enrollment period. It is best to ask your employer about plan rules.

4.  Flexible Spending.  

Workers with federally recognized spouses will be able to add their spouses to their flexible spending arrangements if they have access to one through their employers.

5.  Pensions.

Gay couples will be entitled to survivor benefits from a federally recognized spouse’s pension that is covered by the Employee Retirement Income Security Act, the law governing many retirement plans.

6.  Family Leave Act.

The federal law requires larger employers and public agencies to provide up to 12 weeks of unpaid leave — as well as continuation of health benefits — for the birth or adoption of a child; to care for an opposite-sex spouse, a parent or a child who has fallen ill; or because of the employee’s own health issues. The law will now extend to same-sex spouses.

7.  Estate and Gift Taxes.

Same-sex married couples will also avoid, or at least defer, paying federal estate taxes because spouses can transfer money and property to each other — both during their lives and after death — without federal tax consequences. This was the issue at the center of the Supreme Court's decision