Wells Fargo Advisors LGBT Insight: What Same-Gender Couples Should Know About Federal Spousal Benefits

Steve Gunn, CRPC, is a Financial Advisor who holds the Accredited Domestic Partnership AdvisorSM Designation with Wells Fargo Advisors, LLC, in Seattle. He seeks to address the unique financial challenges that same-gender partners face. You can reach Steve at steve.gunn@wfadvisors.com and www.wfadvisors.com/steve.gunn


It has been a year since the U.S. Supreme Court ruling that invalidated key provisions of the 1994 Defense of Marriage Act, and the impact has been significant at the federal and state levels. With at least 19 states and the District of Columbia now recognizing same-gender marriages, many policies and regulations that impact multiple facets of couples’ lives are rapidly changing.

Do I Qualify

To qualify for the federal spousal benefits listed below, LGBT couples must have been married in a jurisdiction that recognizes same-gender marriageknown in IRS terms as their “Place of Celebration.” These benefits are available regardless of where the couple live in the United States, i.e., their “Place of Domicile.”

Keep in mind that some states still restrict or deny certain same-gender spousal rights. If a same-gender couple wed in a jurisdiction that recognizes the marriage but live in a state that does not, it is wise to consult a tax or legal professional for advice specific to their “Place of Domicile.”

Other legal relationship statuses, such as “Registered Domestic Partnerships” and “Civil Unions,” are generally not recognized as “spouses” for the purposes of the federal benefits described below.

What Are the Benefits

Here are a few of the newly available federal benefits for LGBT married couples.

Tax Treatment: The IRS now interprets the term “husband and wife” in the Internal Revenue Code (IRC) to include same-gender married couples, based upon the marriage-recognition status in the couple’s “Place of Celebration.” This change creates several significant spousal exemptions for LGBT married couples related to asset transfers, estates, gifts and inheritances that were previously unavailable to them.

While a couple will file their federal tax return using the “Married” status, if their “Place of Domicile” does not recognize the couple’s marriage, they will likely need to file state tax returns as “Single.”

Couples who reside in “community property” states should consult a tax or legal professional regarding their “community” versus “separate” property and the impacts of making intentional or unintentional changes to the classification.

Employee Benefits: The portion of an employer-paid health-insurance premium that covers a same-gender spouse is no longer taxable income to the employee, though the payments may still be subject to state or local income taxes in certain jurisdictions. Married employees can also use money in a qualified health-savings account or health-reimbursement account to pay for their same-gender spouse’s medical expenses.

In the public sector, same-gender spouses of federal employees are now eligible for spouse coverage for medical, dental and vision insurance; life insurance; and long-term-care insurance, according to the Office of Personnel Management.

Same-gender spouses who are military personnel and Department of Defense employees qualify for the same benefits as opposite-gender spouses. Service members who are part of a same-gender couple and are stationed at a base in a non-recognition state can receive as much as seven days’ marriage leave to get married in a state where their marriage is legal, provided they are stationed more than 100 miles from a same-gender marriage state.

Family Medical Leave: A legally married same-gender spouse can take family medical leave to care for a spouse who has a serious health condition or to bond with a new child born to, adopted with or fostered with a same-gender spouse, the Labor Department says.

COBRA Insurance: The COBRA law allows employees and their covered dependents to continue their employer’s group health benefits after termination of employment. Revised definitions recognize same-gender spouses based on the “Place of Celebration” for all spousal benefits associated with COBRA.

Immigration: The Citizen and Immigration Services division (USCIS) of the Department of Homeland Security has ruled that for the purposes of immigration law, same-gender marriages are treated the same as opposite-gender marriages. This opens the door to all immigration benefits available based on marital status or one’s immigration status as a spouse or fianc/fiance.

Visas: The same-gender spouse of a visa applicant coming to the U.S. for any purposeincluding work, study, international exchange or legal immigrationis now eligible for a derivative visa. Applicants do not have to live or intend to live in a state in which same-gender marriage is legal, as long as their marriage is valid in their “Place of Celebration.”

Social Security: Many LGBT married couples have questions about Social Security and Medicare benefits eligibility. The Social Security Administration determines eligibility based on the couple’s marriage recognition in the “Place of Domicile” at the time of filing, not “Place of Celebration.” Look for more on that topic in next month’s column.

While the recognition of federal benefits is a welcome development, state laws affecting marriage, divorce, family relationships, discrimination and employment are still unfavorable for LGBT individuals in many states. As a result, it’s important to work closely with a qualified attorney and CPA in the state where you live, to get up-to-date information in a rapidly changing tax and legal environment.

Wells Fargo Advisors is not a tax or legal advisor. Investment products and services are offered through Wells Fargo Advisors, LLC, member SIPC. Wells Fargo is No. 17 in the 2014 DiversityInc Top 50.

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