Calling it an unconstitutional violation of the Fifth Amendment, the U.S. Supreme Court has struck down a federal law defining marriage as between one man and one woman. Same-sex couples who wed in states where allowed must now be treated as spouses under the Internal Revenue Code (IRC), the Employee Retirement Income Security Act (ERISA), and more than 1,000 other federal laws.
What this means is that all domestic partners within states that view that relationship as a legal marriage are now considered spouses. Prior to this, they potentially were covered as a dependent.
For those employees that have now been able to add their spouse to their plan, they can elect to increase their FSA elections, up to their maximum allowable amount.
What does this mean for your employees’ Flexible Spending Accounts (FSA)?
For federal purposes, including employee FSA benefits, the change became effective on June 26, 2013. Going forward, a same sex couple that is married under state law has the same right to use a spouse’s FSA as does a heterosexual married couple. Therefore, Paypro will administer your flexible spending account for same-sex couples exactly as for opposite sex couples. This change does not affect domestic partner coverage you may currently have in place, as it does not address nor grants rights to domestic partners.
What do you need to do?
Begin by informing your employees that the DOMA ruling is viewed as a qualifying event for their flexible spending account. This means they may change their current year annual election, up to a maximum of $2,500. You may also wish to communicate to employees who did not previously elect a flexible spending account and allow them to now consider enrolling.