GDP Blog

6th Circuit Upholds Same Sex Marriage in Four States

Posted by John Powter

Nov 11, 2014 7:00:00 AM

How does it impact my employee benefit plan?

On Nov. 6, 2014, the U.S. Court of Appeals for the 6th Circuit upheld bans on same-sex marriage in four states. In a 2-1 decision, the 6th Circuit overturned lower court rulings in Kentucky, Michigan, Ohio and Tennessee that were in favor of same-sex marriage. The 6th Circuit ruled that the same-sex marriage issue should be decided in each state through the regular political process, and not through the court system.


The 6th Circuit is the first federal appeals court to uphold state bans on same-sex marriage since the U.S. Supreme Court struck down part of the federal Defense of Marriage Act (DOMA) in 2013. This decision directly conflicts with same-sex marriage decisions from the 4th, 7th, 9th and 10th Circuits, where the federal appeals courts struck down state bans on same-sex marriage.

Because there is a split in decisions from the federal appeals courts, it is likely that the U.S. Supreme Court will review the same-sex marriage issue in the future. A Supreme Court decision on same-sex marriage could be issued as early as next summer. This decision could resolve the constitutional issue surrounding same-sex marriage laws once and for all.

Same-sex Marriage Decisions

Following the Supreme Court’s DOMA ruling, a number of courts have addressed same-sex marriage laws. So far, 5 out of the 13 federal appeals courts have issued decisions on this issue.

  • State laws prohibiting same-sex marriage have been invalidated by the 4th Circuit, 7th Circuit, 9th Circuit and 10th Circuit.
  • State laws prohibiting same-sex marriage have been upheld by the 6th Circuit.

Currently, same-sex marriage is available in 32 states and the District of Columbia.

6th Circuit Decision

Kentucky, Michigan, Ohio and Tennessee have laws prohibiting same-sex marriage. These four states also do not recognize same-sex marriages that are legally entered into in other states. Earlier this year, federal district courts struck down laws against same-sex marriage in these four states, but these rulings were put on hold pending appeal.

The 6th Circuit’s ruling overturned the lower court decisions in Kentucky, Michigan, Ohio and Tennessee. Based on the growing number of states that have legalized same-sex marriage 

the 6th Circuit’s decision recognizes that it is likely that same-sex marriage will eventually become legal throughout the United States. However, according to the 6th Circuit, the decision to legalize same-sex marriage should be made through the regular political process, and not through the judicial process.

Because the 6th Circuit overturned the lower court decisions, laws against same-sex marriage in Kentucky, Michigan, Ohio and Tennessee remain in effect.

Supreme Court Review

Before the 6th Circuit’s decision was issued, the Supreme Court announced that it would not hear appeals in the other same-sex marriage cases. Supreme Court Justice Ruth Bader Ginsburg indicated that the main reason the Supreme Court decided not to review the same-sex marriage cases was that there was not a split in decisions among the federal appeals courts at that time.

The 6th Circuit’s decision conflicts with the decisions from the other appeals courts, which creates a split between the federal appeals courts. As a next step, the challengers to the same-sex marriage laws in Kentucky, Michigan, Ohio and Tennessee can ask the full 6th Circuit to reconsider the case, or the challengers can proceed directly to the U.S. Supreme Court.  The Supreme Court justices would have to agree to hear the case, but the split between the appeals courts makes it likely that they would decide to resolve the same-sex marriage issue.

Top 50 Risks Survey

What does the Supreme Court’s decision mean for employee benefits?

So what does the recent Supreme Court action (or rather, inaction), mean for employers that maintain employee benefit plans? The Internal Revenue Service (IRS) and U.S. Department of Labor (DOL) have already issued guidance that provides that, for purposes of the Internal Revenue Code (the “Code”) and the Employee Retirement Income Security Act (ERISA), the issue of whether a marriage is valid depends on whether it is recognized in the state where the marriage ceremony occurs. This means that the federal protections provided for under ERISA and the Code already extend to same-sex spouses—even those who reside in one of the states in which same sex couples cannot marry.

As for employee benefit plan issues that are not dictated by the Code or ERISA—such as designing the eligibility of a health or welfare plan—the recent Supreme Court decision does not directly impact an employer’s ability to decide whether to extend coverage to a same-sex spouse. As the law stands today, sponsors of self-insured health plans may continue to choose whether or not to offer coverage to same-sex spouses (and a state law that provides otherwise should be preempted by ERISA). Earlier this year, a federal district court in New York found that an employer health plan that extended eligibility only to opposite-sex spouses did not violate section 510 of ERISA, which contains a non-retaliation rule (generally prohibiting discrimination against participants who exercise a right to which they are entitled under a benefit plan). However, because limiting health coverage to opposite-sex spouses may lead to challenges or employee relations issues, some employers are revisiting how they want to design their plans. Employers that sponsor fully insured health plans also must consider the impact of state insurance laws that may require same-sex spousal coverage (as they are saved from preemption).

Below is a list of the protections and rules that currently apply under ERISA and the Code to “spouses,” using the IRS’s and DOL’s definition that looks to the state of ceremony for determining the legality of the marriage.

Qualified Retirement Plans

Assuming a same-sex marriage occurs in a state that recognizes same-sex marriage, the following protections are available:

  • QJSAs and QPSAs. Defined benefit plans and certain defined contribution plans must provide qualified joint and survivor annuities (QJSAs) and qualified preretirement survivor annuities (QPSAs) for same-sex spouses.

  • Default Beneficiaries. Defined contribution plans that are not subject to QJSA and QPSA requirements (e.g., most 401(k) plans) must treat a same-sex spouse as the defined beneficiary unless the same-sex spouse consents to the participant’s designation of another beneficiary.

  • QDROs. A same-sex spouse may have a right to a portion of the participant’s accrued benefit or plan account under a qualified domestic relations order (QDRO).

  • Rollovers. A surviving same-sex spouse may make rollovers to another employer’s eligible retirement plan or to a personal or inherited individual retirement account, rather than only to an inherited individual retirement account.

  • Hardship Withdrawals. A same-sex spouse is now entitled to a hardship withdrawal regardless of whether he or she is designated as the primary beneficiary.

Also, plan sponsors need to check the terms of their tax-qualified plans to determine whether they need an amendment to reflect the IRS guidance that recognizes a marriage based on the state of ceremony. (For example, plans that define “spouse” based on the Defense of Marriage Act, for example, will need to be updated.) Generally, plan sponsors have until the end of 2014 to update their plans to address the IRS guidance.

Welfare Benefit Plans

Assuming a same-sex marriage occurs in a state that recognizes same-sex marriage, the following protections are available:

  • Cafeteria Plans. If an employer extends health care coverage to same-sex spouses, employees can make pre-tax salary reduction elections for federal income tax purposes for health coverage (including coverage for same-sex spouses) under a cafeteria plan sponsored by the employer. On the state income tax level, the applicable state tax laws must be reviewed to determine whether they follow federal tax treatment or instead disallow pre-tax salary reduction for same-sex spouses.
  • Imputed Income. Employers should no longer impute federal income tax to an employee when the employee pays premiums for certain welfare benefits for his or her same-sex spouse. On the state income tax level, the applicable state tax laws must be reviewed to determine whether they follow federal tax treatment or instead require imputed income for same-sex spouses.
  • COBRA. A same-sex spouse has the same rights as an opposite-sex spouse to elect continuation coverage.
  • Health Flexible Spending Arrangements and Health Reimbursement Arrangements. Qualified medical expenses of same-sex spouses are reimbursable from a health flexible spending arrangement or a health reimbursement arrangement, without imputation of income.
  • Dependent Care Flexible Spending Arrangement. If applicable requirements are met, care for same-sex spouses is reimbursable without imputation of income. For married couples filing a joint tax return, the maximum contribution is $5,000.
  • Health Savings Accounts. The joint limit, which is $6,550 for 2014, applies to same-sex couples.

For a complete compliance review please contact one of our Advisors for a review of your current plan, you can reach our office at 800-473-8697.

Subscribe to Email Updates

Stay Connected

Popular Posts