The state of Virginia began issuing same-sex marriage licenses on October 6th, after the Supreme Court refused to hear an appeal of the Circuit Court decision that ruled Virginia’s ban on same-sex marriages as unconstitutional. Prior to October 6th, same-sex marriages were not performed in or recognized by Virginia. This meant that Virginia employers were unable to offer same-sex spouse coverage in health or life insurance contracts. Additionally, Virginia residents who have same-sex spouse health coverage from a non-Virginia employer have been subject to state income taxes on the value of coverage (but not federal income taxes, per last year’s DOMA decision).
With regard to taxation of same-sex spouse coverage, on October 7th the Virginia Department of Taxation issued Tax Bulletin 14-7, which states that same-sex marriages recognized for federal income tax purposes are now recognized for Virginia income tax purposes. This means that the value of coverage will no longer be subject to state income taxes for Virginia residents.
With regard to eligibility of same-sex spouses under Virginia-based group health contracts, Keller is verifying changes with the carriers. UnitedHealthcare has indicated it will allow a special enrollment period for 31 days from October 6 to enroll a same-sex spouse, or a same-sex spouse can be added upon marriage or at open enrollment. Some contracts, such as CareFirst, may only include opposite-sex spouses as eligible for coverage. Until this contract language is modified, same-sex spouses can continue to be covered under a domestic partner rider (or such a rider can be added, if necessary).
Please note that even if a same-sex spouse is covered as a domestic partner (because your contract only allows for opposite-sex spouses), the value of coverage is not subject to federal income tax as well as state income tax in DC, Maryland and now, Virginia. The value of coverage for a domestic partner remains taxable, unless the domestic partner is considered an IRS tax dependent of the employee. For all tax issues, please consult your corporate tax advisor.
Please contact your Keller account team with any questions regarding eligibility under your insurance contract.