Category: Blog

In order for the IRS to verify that individuals and employers are meeting their shared responsibility obligations, and that individuals who request premium tax credits are entitled to them, employers and insurers will be required to provide reporting on the health coverage they offer. Reporting will first be due early in 2016, based on coverage in 2015.

On July 24, 2014, the IRS published drafts of several of the forms that will be used to provide the required reporting. Instructions were not released with the draft forms, so some questions remain unanswered. The IRS has said that it will issue drafts of the instructions in August and that the final forms and instructions will be available by the end of 2014.

Generally speaking, an employer will not have any reporting requirement if it has fewer than 50 full-time and full-time equivalent employees in its controlled group and it sponsors a fully insured medical plan. All other employers will have at least some reporting. This appears to include employers with 50 to 99 employees for 2015 – even though the employer-shared responsibility requirement has been delayed until 2016 for most employers in this group, reporting is still needed to help determine whether individual employees owe penalties or are eligible for premium subsidies.

Employers with 50 or more full-time or full-time equivalent employees in their controlled group – whether the coverage offered is fully insured or self-funded – will need to complete both Part I and Part II of IRS Form 1095-C. This form will be required for each employee, regardless of whether the employee is eligible for medical coverage. Part I includes basic identifying information. Part II will be used to determine whether minimum essential, minimum value and affordable coverage was offered and accepted. This data will be used to determine whether the employer owes penalties for not offering minimum essential coverage (these are sometimes referred as the “A” penalty or the $2,000 penalty) or for not offering affordable, minimum value coverage (these are sometimes referred to as the “B” penalty or the $3,000 penalty) and if the employee is eligible for premium subsidies.

The employer will use one of several codes to report whether it offered coverage to the employee, and the extent of the coverage it offered.  The employer also will report the employee’s share of the lowest cost monthly premium for self-only minimum value coverage for which the employee is eligible.

Finally, the employer will enter codes that the IRS will use when determining if a penalty is owed. Those codes address whether the employee was eligible for coverage during the month, including whether the employee was employed, classified as full-time, in a waiting period or covered. If the employee was covered during the month, the employer will report whether coverage was affordable and which affordability safe harbor was used.

In addition, employers with self-funded plans will complete Part III of Form 1095-C. Part III information will be used to determine whether the employee’s family met its requirement to have minimum essential coverage.

Information that is similar to the information provided on Part III of Form 1095-C will be provided by the insurer to the employee using IRS Form 1095-B. Form 1095-B will report whether the employee and the employee’s spouse and children had minimum essential coverage for each month. This means that an employee who works for a mid-size or large employer that provides coverage on a fully insured basis will receive two forms: Form 1095-B from the insurer and Form 1095-C from the employer.

Employers with 50 full-time and full-time equivalent employees in their controlled group also will need to file IRS Form 1094-C, with a copy of the Form 1095-C it issued to each employee. Employers that are part of a controlled or affiliated service group also must enter the name and EIN of all other employers that were part of the group during the calendar year. Each employer in a controlled or affiliated service group must file a separate report, although one member of the controlled group may complete the form on behalf of other members. In certain circumstances, government plans may report on a single form through a “designated government entity.”

The reporting will occur with the same timing and process as W-2 and W-3 reporting. Even though these forms are not final, employers may want to study them as they begin to determine whether they are currently collecting, and will be able to retrieve, the information needed to complete the forms.

For a summary of the draft IRS employer and insurer reporting forms, download UBA’s PPACA Advisor, “IRS Issues Drafts of Individual and Employer Responsibility Reporting Forms.”  

By Stephen Coffman, Group Practice Leader
The Guardian Life Insurance Company of America  

A more meaningful attempt to manage absences can go a long way toward helping ease the staffing and morale challenges of small and midsize businesses that often feel the impact of absences more acutely than larger firms. What’s more, in an environment where government oversight is only intensifying, effective absence management may become more challenging and burdensome for employers unless they have access to a specialist who understands the increasing and ever-changing federal, state and local Family and Medical Leave Act (FMLA) laws. The Americans with Disabilities Act (ADA) also needs to be considered.  For example, requirements have expanded in recent years to include reasonable accommodations designed to reduce employee stress, which can trigger absences and erode productivity.  

Small or midsize employers may not even be aware of all these issues and updates, nor have the staff to appropriately address them, which can leave companies vulnerable to lengthy and costly ligation. Plus, a growing “sandwich generation” combined with an aging population means the incidences and complexity of employee absences will only increase.  For this and many other reasons, outsourcing absence management or partnering with an expert makes a lot of sense.  But what should employers look for when evaluating their outsourcing options? Absence management programs that follow these five best practices, as revealed in the Guardian Absence Management Activity Index^SM and Study*, will generate better outcomes for companies:  

1. A full return-to-work program, starting with a written policy.
2. Detailed reporting for disability and FMLA usage patterns, costs and more.
3. A process that gives employees referrals to health management programs.
4. A central leave-reporting portal for Short Term Disability and Family and Medical leaves.
5. Using the same resource for Short Term Disability, Family and Medical leaves and other benefit programs.

Aside from helping to ensure compliance with FMLA, a more robust program approach to absence management can help shorten the duration and severity of absences and return employees to work sooner, thereby reducing health care costs and improving productivity.  It’s a win-win for both employers and their employees.

To learn more about absence management best practices and solutions, contact a Guardian Group Sales Representative. Exclusively for UBA Partners, join Guardian’s complimentary webinar “The Road to Better Absence Management” on Thursday, August 21, 2014, at 2:00 p.m. ET / 11:00 a.m. PT. Click here for participation details. If you’re not a UBA Partner and you are interested in the webinar, click here to locate your nearest Partner Firm.

*The Guardian Absence Management Activity Index^SM and Study, 2013

PPACA brings numerous responsibilities and options to employers. Below is a summary of the PPACA provisions that apply to group health plans and whether the provision applies to insured small group plans (50 or fewer employees) provided inside and outside the SHOP exchange.

Provisions Effective 2014 or Later

Provisions Effective 2010 – 2013

United Benefit Advisors has created reference charts that summarize the PPACA requirements applicable to employers of all types. These new resources cover more than 40 PPACA provisions such as FSA limits, W2 reporting, PCORI fees, exchange notices, eligibility waiting periods, modified community rating, deductible and out of pocket limits, wellness rules, IRS reporting, penalties, cadillac tax and more. View the right tool for you at: 

http://www.ubabenefits.com/Wisdom/ComplianceSolution/GroupHealthPlansandPPACA/tabid/351/Default.aspx

* Does not apply in whole or part to grandfathered plans; with respect to guaranteed access, open enrollment will be available both inside and outside the exchange each Nov. 15 – Dec. 15 for employers that cannot meet participation requirements for initial issue.

^# States have the option to renew policies that do not meet all of the PPACA requirements through Oct. 1, 2016.  If renewal of “non-compliant” policies is allowed, this requirement will not apply to those renewed policies.

Note: For 2014 and 2015 a group is considered “small” for the insurance market requirements of PPACA if the group has 50 or fewer employees.  Beginning in 2016, a group will be considered “small” for the insurance market requirements if the group has 100 or fewer employees. (In most states part-time employees count pro rata toward full-time equivalent employees using the same method as the employer shared responsibility/play or pay requirement.)

In contrast, for purposes of the employer shared responsibility/play or pay requirement, for 2015 an employer generally will not be considered “large” unless it has 100 or more full-time or full-time equivalent employees.  Beginning in 2016, an employer will not be considered “large” for purposes of the employer shared responsibility/play or pay requirement unless it has 50 or more full-time or full-time equivalent employees.

By Carol Taylor

A little over a month ago, the Department of Health and Human Services (HHS) released several Q&As regarding the Federally Facilitated Small Business Health Options Program (FF-SHOP). At the time, they stated the FF-SHOP would not support COBRA transactions (see blog and Q&A here).

Several more Q&As were issued recently, and while they now state that COBRA participants should be listed as an employee (see Q&As 2851, 2874 and 2883), there are still issues that employers should be aware of before rushing to enroll in the FF-SHOP. Some of these issues could result in fines or lawsuits, depending on the situation.

One major federal COBRA issue that still exists is child-only policies will not be allowed (see Q&As 2873 and 2887). Non-compliance with this portion of COBRA could result in fines of $100 per day. While child-only elections for COBRA do not occur frequently, they are a necessity, especially if the child is disabled, has a major illness, or was involved in an accident and the deductible or out of pocket maximum has been, or is close to being, met. This also affects most states, where mini-COBRA or state continuation laws have been passed.

While in some states adults will not be an issue for continuation, in others it will be. Florida, for example, requires the insurance carrier to bill the continuant directly. Non-compliance in this area could cause someone wanting to continue coverage to sue their former employer, since it breaks Florida statutes.

At least eight states allow dependents over the age of 26 to remain covered under their parent’s policies, provided that certain restrictions are met. Most of these require the over-age dependent to be a citizen of that state and to not be married; however, several other factors may also be required. A listing of these states is provided here. In the FF-SHOP, over-age dependents will be terminated off the coverage automatically as listed in Q&As 2890 and 2856. 

The over-age dependent automatic termination becomes an even larger issue in states where disabled over-age dependents are allowed to stay on their parent’s policies. This affects employers in at least 10 states. While many believe that it should not be an issue for the parents to just obtain an individual policy for those affected, there could be potentially devastating effects to families being forced off the group coverage. Many individual policies have higher deductibles and out of pocket maximums, narrow provider networks, limitation of carrier or plan choices, different prescription formularies and other items that must be expertly evaluated before switching coverage.

Another issue employers should be mindful is if their state requires no premium for the first month for newborns. The FF-SHOP will charge a pro-rated premium for all newborns. In their Q&As on this topic, they even acknowledge that they are violating state laws. The Q&As can be found at 2866 and 2880.

Although there are certainly other issues, one remaining concern in the latest round of Q&As is the pro-rate of premiums, found in Q&A 2894. This again becomes an issue for many states that do not allow any premium billing for other than a full month of coverage. It could be a major concern for employers to administer, since calculating the pro-rated amount can be a daunting task for many. If they calculate the amount incorrectly, they will need to correct payroll deduction amounts, leading to unhappy employees, if the amount was underestimated.

While states may levy fines for non-compliance, the employer should be aware that the most immediate risk is a lawsuit from the employee or former employee. They could even be filed under federal purview, such as the ADA and others. Before rushing into the FF-SHOP policies, an employer should weigh all these factors. They likely are not worth the minimal and limited small business tax credit for the apparent risks associated with breaking federal or state laws.

In the world of ever-changing rules, it is always best to seek the counsel of a seasoned insurance agent or broker.

Carol Taylor is a Employee Benefit Advisor with D&S Agency, a UBA Partner Firm.

For further information about the health care reform requirements for your business, download UBA’s complimentary guide, “PPACA Compliance and Decision Guide for Small and Large Employers” from the PPACA Resource Center at http://bit.ly/1nHbaWv.

As was the case last year, insurers with medical loss ratios (MLRs) that were below the prescribed levels on their blocks of business must issue rebates to policyholders. The MLR threshold for large groups is 85%, and the threshold for small group and individual policies is 80%. The MLR ratio is based on the insurer’s block of business in the state, and not on the specific policy’s claims experience and administrative costs. Insurers must pay rebates owed on calendar year 2013 results by August 1, 2014. The rules for calculating and distributing these rebates are essentially the same this year as they were last year.

The guidance provided by the regulatory agencies on how employers should distribute rebates has been fairly general, so employers have some discretion on how to calculate and distribute the employees’ share. These general principles apply:

1. Assuming both the employer and employees contribute to the cost of coverage, the rebate should be divided between the employer and the employees, based on the employer’s and employees’ relative share. Employers may divide the employees’ share of the rebate in any reasonable manner – for example, the rebate could be divided evenly among the employees who receive it, or it may be divided based on the employee’s contribution for the level of coverage elected (such as employee only or family). Employers are not required to precisely determine each employee’s share of the rebate, and so do not need to perform special calculations for employees who only participated for part of the year, moved between tiers, etc.
    
2. The employer may pay the rebate in cash, use it for a premium holiday or other premium reduction, or use it for benefit enhancements. ERISA plans must apply or distribute the rebate within 90 days after it is received or the rebate will need to be deposited into a trust.
    
3. The employer should consider the practical aspects of providing a rebate in a particular form. A cash rebate is taxable income if the premium was paid with pre-tax dollars, so issuing a check for a small rebate may not be the best option. However, an employer cannot simply keep the rebate if it determines that cash refunds are not practical–it will need to use the employee share of the rebate to provide a benefit enhancement or premium reduction. 
    
4. Some plans now state how a rebate should be used. If the plan describes a method, that method must be followed. 

The Department of Health and Human Services has posted a listing of Issuers Owing Refunds for 2013.

For further information regarding MLR Rebate consideration for private and government/church plans, go to: http://bit.ly/Xg2EEL.

As employers determine their plan designs for the coming year, those with grandfathered status need to decide if maintaining grandfathered status is their best option. Following are some frequently asked questions, and answers, about grandfathering a group health plan. 

Q1: May plans maintain grandfathered status after 2014?

A1:  Yes, they may. There is no specific end date for grandfathered status.

Q2:  What are the advantages of grandfathered status?

A2:  Grandfathered plans are not required to meet these PPACA requirements: 

• Coverage of preventive care without employee cost-sharing, including contraception for women
• Limitations on out-of-pocket maximums (starting with the 2014 plan year)
• Essential health benefits and metal levels (starting with the 2014 plan year; these only apply to insured small group plans)
• Modified community rating (starting with the 2014 plan year; this only applies to insured small group plans)
• Guaranteed issue and renewal (starting with the 2014 plan year; this only applies to insured plans)
• Nondiscrimination rules for fully insured plans (this requirement has been delayed indefinitely)
• Expanded claims and appeal requirements
• Additional patient protections (right to choose a primary care provider designation, OB/GYN access without a referral, and coverage for out-of-network emergency department services)
• Coverage of routine costs associated with clinical trials (starting with the 2014 plan year)
• Reporting to HHS on quality of care (requirement has been delayed indefinitely)

Q3:  What PPACA requirements apply to grandfathered plans?

A3:  Most PPACA requirements apply to grandfathered plans. This includes:

• Limits on eligibility waiting periods (starting with the 2014 plan year)
• PCORI Fee
• Transitional Reinsurance Fee
• Summary of Benefits and Coverage
• Notice regarding the exchanges
• No rescissions of coverage except for fraud, misrepresentation, or non-payment
• Lifetime dollar limit prohibitions on essential health benefits
• Phase-out of annual dollar limits on essential health benefits, with all limits removed by the 2014 plan year
• Dependent child coverage to age 26 (an exception for grandfathered plans when other coverage is available expires at the start of the 2014 plan year)
• Elimination of pre-existing condition limitations (for children currently and all covered persons starting with the 2014 plan year)
• W-2 reporting of health care coverage costs (this only applies if the employer provided more than 250 W-2s for the prior calendar year)
• Wellness program rules
• Minimum medical loss ratios (this only applies to fully insured plans)
• Employer shared responsibility (“play or pay”) requirements (generally starting with the 2015 plan year)
• Employer reporting to IRS on coverage (starting in January 2016, based on the 2015 calendar year)
• Excise (“Cadillac”) tax on high cost plans (starting in 2018)
• Automatic enrollment (this only will apply to employers with more than 200 full-time employees; this requirement has been delayed indefinitely)
   

For more FAQs on Grandfathered Health Plans, download a complimentary guide in UBA’s PPACA Resource Center: http://www.ubabenefits.com/Wisdom/ComplianceSolution/LegislativeSummaries

On July 22, 2014 two Courts of Appeals issued decisions that address whether only people who live in states that have state-run Marketplaces (which are also called exchanges) are eligible to receive premium tax credits or subsidies under the Patient Protection and Affordable Care Act (PPACA). One court held that the subsidy should only be available to people covered by state-run Marketplaces, and the other ruled that people should be eligible for subsidies regardless what type of Marketplace their state has.

The IRS is responsible for implementing and interpreting the premium subsidies part of the law. It has ruled that all eligible individuals are entitled to a subsidy regardless whether they live in a state that has a state-run Marketplace or a federally-run Marketplace. The basic issue in these cases is whether the IRS is bound by one sentence in PPACA, which says that a taxpayer “enrolled through an exchange established by a State” is subsidy-eligible, so that only a person enrolled in a state-run Marketplace is eligible for a premium subsidy, or whether the IRS had the authority to look at PPACA as a whole and conclude that it would not make sense to limit subsidies to people in state-run Marketplaces, and therefore interpret the law to mean a person enrolled in any Marketplace is subsidy-eligible. 

The Obama Administration has already said that it will appeal the decision of the Court of Appeals for the District of Columbia in Halbig v. Burwell (which ruled that the IRS overstepped its authority, and the subsidy should only be available to people living in states that have state-run Marketplaces). It is likely that the decision of the Court of Appeals for the Fourth Circuit (which ruled in King v. Burwell that the IRS has the authority to provide subsidies to individuals in all states) also will be appealed.  In both of these cases a three-judge panel decided the case, so the initial appeal could be to the full Court of Appeals for that circuit.  In all likelihood these cases will ultimately be appealed to the U.S. Supreme Court, which means there may not be a clear answer on this question before June 2015 or 2016.

While these cases work their way through the courts, these decisions will not be enforced. Employees who are currently receiving premium subsidies will continue to receive them.  Employers in states with federally-run Marketplaces should not assume that they will not have to comply with the employer-shared responsibility (play or pay) requirements.

Certainly, a final decision that the premium subsidies are only legally available in states that have state-run Marketplaces would have a huge impact.  (Currently, about one-third of the states have state-run Marketplaces and the other two-thirds have federally-run Marketplaces.)  It would mean that all the people enrolled in federally-run Marketplaces who are currently receiving subsidies would no longer be eligible to receive them (it seems unlikely that subsidies that have already been received would have to be repaid).  It would also mean that fewer people would be subject to the individual mandate since there is an exception to that requirement if coverage is not affordable.  For employers in states with federally-run Marketplaces, penalties would not apply, because penalties are only triggered if an employee receives a subsidy.  There would be broader implications as well – would so many people in the Marketplaces drop coverage because of the loss of subsidies that the Marketplaces would fail?  Would states be faced with lobbying from individuals and insurers to set up a state Marketplace so that subsidies would be available, and from employers advocating for federally-run Marketplaces so that penalties would not apply?  

For further information about the health care reform requirements for your business, download UBA’s complimentary guide, “PPACA Compliance and Decision Guide for Small and Large Employers” from the PPACA Resource Center at http://bit.ly/1nHbaWv.

By Elizabeth Kay
Compliance and Retention Analyst for AEIS, UBA Partner Firm in San Mateo, CA

According to new information from United Benefit Advisors (UBA), health savings accounts (HSAs) are outpacing health reimbursement arrangements (HRAs) in both adoption and participation rates. And now that metal tier health plans  [e.g., platinum, gold, silver, etc.] are allowed higher deductibles, employers are increasingly looking at HSA qualified plans for their upcoming plan year. Here’s a look at why this trend is unfolding.

The rising costs of health insurance are directly related to the rising cost of health care.  One of the contributing factors has been consumers saying ‘yes’ to tests or procedures that they might not really need ­ — but because the insurance companies were paying for them, they may not have been motivated to say ‘no’. 

Consumer-Driven Health Plans (CDHPs) were designed to A) make plans more affordable; and B) help the consumer make better, more informed decisions about their health care since they would be paying the first thousand dollars or more of their claims.  While the strategy was great, in the small group marketplace, when HSA plans were first introduced, it sort of backfired. 

The reason it backfired was that the premiums were so affordable, an employer could move their plan to an HSA plan, fund most or all of the deductible for the employees, and still save on costs of administering their benefit plan.  In this scenario, however, employees were still spending money that was not from their own pocket. The resulting claims experience on HSA plans went up higher than projected, and so did the premiums.  

Then came ‘hybrid’ PPO plans that had a high deductible but came with an office and pharmacy copay as first dollar benefits (not subject to the deductible).  Some carriers allowed an employer to ‘wrap’ an HRA administered by a third party administrator (TPA) around these plans so that the employer could still fund a portion of the deductible to make the overall plan more affordable for their employees and their families. 

Unfortunately, this strategy has not always done well, either. Many carriers would only allow an employer to ‘wrap’ an HRA with certain plans in their portfolios that had been rated accordingly.  However, as explained earlier, when an employer funds most or all of the deductible, the carrier may see higher claims than were projected because employees are not acting as better consumers facing the loss of their own money. The result: carriers may not have collected enough premiums to cover the losses if the plan was not originally rated with this in mind.  

For example, Aetna small group in California had originally allowed all of their 2014 plans to be ‘wrapped’ with an HRA.  Some TPAs were claiming they could take a bronze level plan and turn it into a platinum plan with the Aetna bronze plans wrapped in an HRA. However, Aetna quickly changed their mind and as of March 31, 2014, no longer allows any of their plans to be ‘wrapped’ with an HRA. In fact, they now require the employer to sign a Statement of Understanding declaring that they are not funding any of the deductible unless it is an HSA plan, and they are funding to a qualified HSA account.  Most high deductible plans are rated with the assumption that claims will be less frivolous overall than a low deductible PPO plan, and the insured will be careful in their spending.  I suspect that Aetna’s quick change was due to large claim losses in the beginning of 2014. 

The flip side to an employer implementing a CDHP or an HSA plan with a high deductible, and not funding any portion of the deductible, is that some of their workforce may not be able to afford the new plan.  It can be a fine line between what is affordable for the employer, and what’s affordable for the employees and their families.  This is one way that benchmarking with the health plan survey data can be so beneficial, in that you can see what others in your industry are doing.  Having an educated advisor to help you develop a benefits plan that contains affordable plans for the entire workforce can be invaluable and aid in employee retention.

Finally, educating employees is so essential with any health plan, but especially with a CDHP/HSA/HRA plan because an employee may look at a high deductible plan and immediately think, this is unaffordable.  However, with an HSA plan for example, the employee can set aside funds into an HSA account that’s federally tax-free (and depending on the state, tax-free there as well).  This could virtually reduce their taxable income to a point where the plan becomes more affordable and, therefore, more appealing to the employee. 

Also, explain to your employees who are over age 55 that they can make an additional $1,000 annual contribution to their HSA account to save for retirement because HSA funds can be used to pay Medicare Part B & D premiums and pay for medical expenses.  With this new information, you’ll see their eyes change as the light bulb goes on! The way the plan is received and utilized makes a huge difference in perception. 

For a copy of UBA survey findings showing many differences in HSA/HRA funding levels regionally and across industries, download a copy of the 2013 UBA Health Plan Survey Executive Summary at http://bit.ly/PSEFrx, or request a custom benchmarking report targeted to your business. 

For a comprehensive guide on employee benefits communication strategies, download the UBA whitepaper, “A Business Case for Benefits Communications” at http://bit.ly/1gJR3GE.

Generally, plans that must comply with ERISA must file a Form 5500 by the last day of the seventh month after the close of their plan year. For calendar year plans this means the due date for the Form 5500 is July 31. Government plans (which includes most public schools) generally do not need to comply with ERISA and therefore do not need to file a Form 5500. Many church plans also are exempt from this requirement.

A Form 5500 is needed for both qualified (retirement) plans and welfare (group) plans. Welfare plans include plans that provide medical, prescription drug, dental, vision, long term and short term disability, group term life insurance, health flexible spending accounts, and accidental death and dismemberment benefits. While other plans may also be considered welfare plans, these are the most common. Qualified (retirement) plans include defined benefit, profit sharing, stock bonus, money purchase, and 401(k) plans, Code section 403(b) plans covered by Title I of ERISA, and IRA plans established by an employer. Qualified plans generally must file even if they have fewer than 100 participants, although Form 5500-SF often may be filed instead of the full Form 5500. 

Welfare (group) plans generally must file the Form 5500 if:

• The plan is fully insured and it had 100 or more participants on the first day of the plan year  (dependents are not considered “participants” for this purpose unless they are covered because of a qualified medical child support order)
• The plan is self-funded and it uses a trust, no matter how many participants it has
• The plan is self-funded and it relies on the Section 125 plan exemption, if it had 100 or more participants on the first day of the plan year

In addition, beginning with the 2013 Form 5500, all plans that must file a Form M-1 must also file a Form 5500 regardless how small they are.

Beginning this year, welfare plans need to include an attachment labeled “Form M-1 Compliance Information.” There is not a question on the form for this – it is a free form attachment.  See page 18 of the Form 5500 Instructions for details. It is important to include this attachment, even if the plan does not need to file an M-1, because the Form 5500 will be considered incomplete if this section is skipped.  Generally, multiemployer (union) plans that have been in operation for less than 3 years and multiple employer welfare plans (non-union plans that cover multiple employers that are not a part of a controlled group) must file the Form M-1.

Employers may obtain an automatic 2-1/2 month extension by filing Form 5558 by the due date of the Form 5500. 

Last June, the U.S. Supreme Court ruled that a part of the Defense of Marriage Act (DOMA) that limits the definitions of “marriage” and “spouse” to opposite sex marriages and spouses is unconstitutional. Since then, the Department of Labor (DOL), the Internal Revenue Service (IRS), and the Department of Health and Human Services (HHS) have issued several notices that provide that, for purposes of federal taxes and employee benefits, a person legally married to a same-sex person in any state or foreign country is considered married even if he or she moves to a state that does not recognize same-sex marriages.

In contrast to this “state of celebration” approach, under the Family and Medical Leave Act (FMLA) an employee is considered married — or unmarried — based on the law of the state in which he or she lives when FMLA begins. The DOL has now issued a Proposed Rule that would change the FMLA definition of spouse to match the definition that is being used for other purposes — that is, if an employee who is legally married to a same-sex individual requests FMLA to care for the same-sex spouse, or the same-sex spouse’s child, FMLA would be available even if the employee lives in a state that does not recognize same-sex marriage. The federal government does not consider civil unions or legally recognized domestic partnerships as marriages, so this change would not affect employees with these arrangements.

Employers should continue to use the employee’s place of residence to determine whether FMLA should be offered until the proposed change becomes final. Comments on the proposed change may be made until August 22, 2014, so the earliest this change would be effective is sometime this fall. Employers, of course, are free to offer leave even though it is not legally required.

The DOL has issued an FAQ on the proposed rule that employers may find helpful.

For further information including best practices in FMLA, attend UBA’s webinar, “Curbing FMLA Abuse,” on Thursday, July 10, 2014, at 2:00 p.m. ET / 11:00 a.m. PT. Go to http://bit.ly/1pJqIfR and enter code UNUMUBA for a $149 discount.