Repealing DOMA May Affect Employee Benefits

If the U.S. Supreme Court strikes down DOMA, employers and otherbenefit plan sponsors should not only consider how defining “spouse” willeffect benefits, but also how defining “child” will effect federal income tax.

Currently, employer-sponsored health coverage made available tochildren of an employee’s same-sex spouse “may result in imputed income to theemployee for federal tax purposes based on the value of that coverage if thechild does not meet certain requirements under the Internal Revenue Code.” 

Based on an IRS FAQ, if an employee is considered to be astepparent in the state in which the couple resides, the employee can avoidimputed income for federal tax purposes. So if DOMA is repealed, more children will be considered stepchildrenand attain favorable tax status.

See Emily Erstling &Tzvia Feiertag, U.S. Supreme CourtDecision on DOMA May Impact Status of Children of Same-Sex Spouses for EmployeeBenefits Purposes, Mondaq, June 1, 2013.