Like employers across the country, the University of California has been reviewing the legal, policy and operational implications of the Supreme Court rulings on California’s Proposition 8 and the federal Defense of Marriage Act (DOMA) for the University and its employees and retirees.
The Supreme Court affirmed same-sex marriage in two rulings on June 26, 2013.
As a result of the historic rulings announced on June 26, 2013, employees in same-gender marriages are no longer subject to taxes on the “imputed income” for UC’s contribution to the cost of health insurance coverage provided for a same-gender spouse enrolled in UC-sponsored benefits.
In addition, the employee’s portion of the cost of health insurance coverage for his or her spouse may be deducted on a pretax basis rather than on an after-tax basis.
The rulings do not affect same-gender domestic partners.
“We know employees and retirees are eager to see these changes go into effect, and we are working as quickly as possible to make them,” said Dwaine Duckett, vice president of human resources for UC. “Unfortunately, implementation is more complicated than it may seem, and it will take more time than we would like.”
The immediate priorities for UC are:
- Making programming changes to payroll and HR systems necessary to implement the tax changes
- Encouraging faculty and staff who were married prior to the rulings to self-identify as soon as possible to ensure they benefit from the changes
- Getting guidance from federal agencies on the effective date of the change
- Assisting employees when that guidance becomes clear
In addition, Duckett said, retroactivity is of critical importance to those affected, and federal guidance has not yet been issued.
“It is understandable that people want equitable tax treatment to the fullest extent,” he said. “We will be prepared to support them and help navigate retroactivity issues when the guidelines become available.”
Work has begun on the programming and addressing administrative details to implement the changes. UC expects them to be ready by mid-September.
In the meantime, employees and retirees who currently have a same-gender spouse will need to self-identify to ensure the taxes on imputed income are not withheld once the programming changes have been completed.
Employees should submit the UPAY 850 form (http://atyourservice.ucop.edu/forms_pubs/forms_worksheets/upay850.pdf) to their local benefits office.
Retirees should submit the UBEN 100 form (http://atyourservice.ucop.edu/forms_pubs/forms_worksheets/uben100.pdf) to the UC Retirement Administration Service Center.
There is no need to complete the entire form, but be sure to include employee or retiree name, employee ID number, spouse’s name and marriage date.
Special Enrollment Period for Same-Sex Spouses
As a result of the Supreme Court rulings, UC employees and retirees have the opportunity to enroll their same-sex spouse in UC health benefits or, in some instances, to change the plans in which they are enrolled.
- If an employee or retiree marries his or her same-gender domestic partner who is not currently covered by UC’s health and welfare programs, the employee or retiree may enroll in and /or add his/her new spouse and eligible family members to health and welfare plans within 31-days of the marriage. Coverage is effective on the date of marriage.
- If a same-gender spouse married prior to the Supreme Court rulings is not currently covered by UC’s health and welfare programs, the employee/retiree has a period of eligibility to enroll in and/or add his/her same-sex spouse and eligible family members in health and welfare plans due to changes in tax treatment. Coverage is effective on the date of receipt of the enrollment form.
- If same-gender spouses married prior to the Supreme Court rulings, or same-gender domestic partners married after DOMA, are currently covered by UC’s health and welfare programs, the employee or retiree may change plans now and/or add eligible family members due to changes in tax treatment. This is a limited eligibility period applicable only to medical, dental, vision, Health and Dependent Care Flexible Spending Accounts. Coverage is effective on the date of receipt of the enrollment form.
In all of these cases, taxes on imputed income will be deducted until payroll system programming changes have been completed. Benefits and payroll offices will retain copies of the enrollment forms so that once the system is updated the employee or retiree record can be changed to allow for accurate tax treatment.
To enroll an eligible same-gender spouse, employees should submit a completed UPAY 850 enrollment form (http://atyourservice.ucop.edu/forms_pubs/forms_worksheets/upay850.pdf) to their local Payroll/Benefits Office, and retirees should submit a completed UBEN 100 enrollment form (http://atyourservice.ucop.edu/forms_pubs/forms_worksheets/uben100.pdf) to the Retiree Insurance Program.
Per UC’s family member eligibility verification (FMEV) process, newly married couples will be required to submit proof of their marriage. UC is working with Secova, FMEV administrator, in an effort to prevent the need for previously verified couples to resubmit documentation.
Addressing Other Outstanding Issues
There are several other outstanding issues related to taxes and benefits to be resolved either through guidance from the federal government or though changes in UC processes.
These include whether the federal law will apply for employees and retirees who live in states that do not permit same-gender marriage, whether the tax changes will be retroactive, and what additional operational and policy changes UC will need to make to address benefits enrollment and eligibility changes needed as a result of the Supreme Court rulings.
“Those affected by these changes can feel confident that UC will make the adjustments necessary to be consistent with the law as quickly as we are able,” Duckett said. “UC will assist anyone in understanding their rights and obligations going forward.”
Watch for more information on At Your Service (atyourservice.ucop.edu).