DOMA ruling and FSA implications

Marriage equality rallies (like in the picture) in front of the U.S. Supreme Court have been ongoing. The Supreme Court recently opened the door for same-sex married couples to share federal employee benefits.

How does the DOMA ruling affect employee benefit plans such as Flexible Spending Accounts?

In a 5-4 vote, The Supreme Court found Section 3 of the Defense of Marriage Act (DOMA) unconstitutional. Signed into law by President Bill Clinton in 1996, DOMA strictly defined a marriage as between a man and a woman and restricted access to health benefits to opposite-sex only couples. Gay and lesbian couples will now be able to enjoy benefits under 1,000+ federal laws that their heterosexual counterparts already have.

Currently, same-sex marriage is allowed in California, Massachusetts, Connecticut, Iowa, Rhode Island, Vermont, Washington, New York, New Hampshire, Maine and the District of Columbia. Delaware, Minnesota, and Rhode Island are among the latest states to begin recognizing same-sex marriage.

According to Justice Anthony Kennedy who wrote the majority opinion (joined by Justices Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor), "The federal statute is invalid, for no legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the state, by its marriage laws, sought to protect in personhood and dignity. By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment."

FSA Changes

Since the ruling, the Office of Personnel Management (OPM) has provided guidance on the extension of benefits for married gay and lesbian couples. Because DOMA was declared unconstitutional, same-sex married couples must be treated as spouses under federal laws and changes will come to retirement plans and health plan documents, among other necessary things.As the OPM noted, additional guidance on benefits can be expected.

The IRS issued its own statement in response of the Supreme Court decision saying, "We will be working with the Department of Treasury and Department of Justice, and we will move swiftly to provide revised guidance in the near future."

In the aftermath of the DOMA ruling, same-sex couples may be able to submit flexible spending account claims for spouses and (newly) qualifying children. Flexible Spending Accounts are tax-free employee benefit plan add-ons that allow employees to be reimbursed for eligible medical expenses. Ending a same-sex marriage or legal separation will not be qualifying events.

Questions will likely arise about recognition of same-sex marriage across state lines and retroactive benefit claims. If for example, a couple marries in a state that recognizes same-sex marriage, but resides in another that does not - how will that affect their benefits? For now, it's a wait-and-see period.

*If you have questions regarding your FSA plan, it's best to consult your HR department or third party administrator. Learn more about Flexible Spending Accounts via our FSA Learning Center.