Implications of the Supreme Court's Gay Marriage Decision for Senior Clients

The U.S. Supreme Court’s ruling that a key provision of the Defense of Marriage Act (DOMA) is unconstitutional clears the way for same-sex couples in states that legally recognize their marriages to receive 1,138 federal benefits and protections that were previously denied them.  These include Social Security survivor and spousal benefits, Medicare spousal benefits and Medicaid’s long-term care spousal impoverishment protections.  But eligibility for federal benefits and protections is far murkierfor couples legally married in a state that recognizes same-sex marriage who move to a state that does not.

Following are selected federal benefits and protections of particular interest to senior clients that will now be accorded to legally married same-sex couples in states that recognize their unions:

Veterans benefits: Spouses of deceased veterans will be eligible to receive veterans benefits. But veterans whose same-sex spouses have significant income may lose benefits they are now eligible for because a spouse's income is counted in determining veterans' eligibility for certain benefits.

Social Security spousal and survivor benefits: Same-sex spouses will be eligible for benefits accorded opposite-sex spouses, such as entitlement to one-half of a working spouse’s full retirement benefit upon reaching full retirement age. If one spouse dies, the surviving spouse is entitled to the worker's full retirement benefits once the surviving spouse has reached full retirement age, assuming that amount is higher than the one he or she was currently receiving.

Supplemental Security Income. Because eligibility depends in part on a spouse's income, some who would have previously qualified as individuals won't be eligible if their spouse has substantial income.

Federal estate and gift taxes: This was the federal benefit at issue in the case the Supreme Court decided.  An unlimited marital deduction now applies on both the state and federal level.  If one spouse wishes to leave all assets to the living spouse, he or she will be able to do so free of estate tax.  Married same-sex couples should also be able to share assets without being subject to gift taxes and be able to receive tax-free access to a trust’s income or principal.

Retirement plan rollover: A deceased spouse’s Individual Retirement Account can roll over to the survivor’s without being subject to tax.

Medicaid’s spousal impoverishment protections: The U.S. Department of Health and Human Services announced two years ago that it would permit states to extend Medicaid long-term care protections long available to spouses of nursing home residents to same-sex domestic partners as well.  Now these protections will apply to all legally married same-sex couple in any of the states where gay marriage is legal.  This will be welcome news for some couples but not for others.  The asset and income protections primarily help lower-income seniors. Although under the Medicaid rules non-married seniors may not freely transfer assets to each other, they are not subject to the asset limits. The healthy partner can keep all of his assets and the nursing home partner need only spend down his own assets. If the healthy partner in a same-sex couple is well off or has all of the couple's assets in his name, the introduction of spousal protections will mean he may keep less of his assets if his partner is to qualify for Medicaid.

Medicare: Married same-sex spouses will now be able to enroll without paying a premium even if they lack the requisite quarters of work history.

For a more comprehensive roster of the specific changes that are coming for some gay marrieds, click here.

What About Federal Benefits in States Hostile to Same-Sex Marriage?

The case brought to the Supreme Court did not challenge the provision of DOMA that says no state must recognize a same-sex marriage from another state.  Between 1996 and 2004, 39 states passed laws stating that marriages are only between "one man and one woman" and in some cases explicitly stating that other marriages will not be honored. If a couple married in a state that recognizes same-sex marriage moves to a state that does not, some federal rights and benefits accorded married couples may not apply to them because different federal agencies and programs follow different standards in determining who is married.  

As Pennsylvania ElderLawAnswers member Jeffrey A. Marshall explains in a recent blog post on the Supreme Court’s decision, “Some federal agencies follow the ‘place of celebration’ standard. This means that if a couple was legally married in any jurisdiction, the marriage is recognized by the agency. But other agencies follow a ‘place of residence’ standard which requires that the marriage be recognized by the place where the couple is living for them to be eligible for the benefit.”

According to various news sources, agencies that use the “place of residence” standard include the Internal Revenue Service, the Social Security Administration, and the Veterans Administration.  It is unclear whether Medicaid’s spousal impoverishment protections will survive a same-sex married couple’s move to a state that does not recognize such unions.  We at ElderLawAnswers would argue that the protections apply because the state programs must comply with the federal rules, which now cannot discriminate.

In his firm blog, ElderLawAnswers president Harry Margolis writes: "It seems now that the federal [Medicaid] guidelines must honor gay and lesbian marriages for all states and those states that do not do so should lose their federal cost sharing. But then again, the state Medicaid officials may be bound by their state laws requiring that they do not honor such marriages. This is undoubtedly going to be resolved by litigation, perhaps reaching back up to the Supreme Court."

To read the Supreme Court's decision, click here

For a MarketWatch article on estate, gift and income taxes for same-sex couples following the ruling, click here