Same Sex Guidance Issued concerning;cafeteria plans, FSA's, HSA's

(Marc Altneu is a local Insurance Professional with experience in benefits including the Affordable Care Act marc@mcmagency.com)

In the Windsor decision issued June 26, 2013, the Supreme
Court found Section 3 of the Defense of Marriage Act
unconstitutional, thus recognizing same-sex marriage at
the federal level. As a result, same-sex spouses lawfully
married under state law are considered married for federal
tax purposes, regardless of where the couple resides. This
decision extends tax-favored treatment of many employerprovided
benefits to same-sex spouses in a manner
consistent with that for opposite-sex spouses.
IRS Notice 2014-1 provides FAQs that address the application
of the various rules associated with cafeteria plans, FSAs,
and HSAs under this expanded definition of a spouse. Briefly,
the guidance:
• Confirms same-sex marriage is a status change under
the permitted election rules and allows for mid-year
election changes.
• Does not require a cafeteria plan amendment unless
the plan does not contain the change in status rules the
regulations.
• Provides that a cafeteria plan participant may pay the
employee cost of same-sex spouse coverage on a pretax
basis through the remaining pay periods in the current
cafeteria plan or may continue to pay for the coverage
on an after-tax basis. In either case, the participant will
be able to make an adjustment on his or her annual tax
return for the entire 2013 calendar year.
• Allows for reimbursement of a same-sex spouse’s or
same-sex spouse’s dependents’ otherwise qualified
medical expenses through a health FSA.
• Imposes the family maximum HSA contribution of $6,450
(for 2013) on a same-sex married couple where at least
one spouse has family HDHP coverage.
• Indicates that, with respect to the dependent care FSA,
the $5,000 combined contribution limit applies to samesex
spouses.

The guidance does not discuss reimbursements from HRAs
or HSAs. Presumably, expenses of a same-sex spouse are
permitted (similar to the health FSA rules), but this is not
explicitly addressed. In addition, complexities may arise for
HSA-eligible individuals that become covered by a same-sex
spouse’s traditional health FSA (non-HDHP coverage) in a
post-Windsor environment. Further guidance on these issues
is needed.