THE IMPACT OF WINDSOR ON TAX AND PUBLIC BENEFITS PLANNING FOR SAME-SEX COUPLES PART II

Article by Thomas D. Begley Jr.

This is the second part of a two-part article dealing with the impact of Windsor on taxation and public benefits.  This article will examine the impact of Windsor on public benefits planning.

In United States v. Windsor,[1] the United States Supreme Court declared §3 of the Defense of Marriage Act (DOMA) unconstitutional.  This section limited marriage to a union between one man and one woman.  Windsor did not apply to §2 of DOMA, which permits states to refuse to recognize the actions of another state on the issue of same-sex marriage.  Therefore, a couple married in New Jersey would have a valid marriage because the marriage was celebrated in a state that recognizes same-sex marriages.  However, if that same couple then moved to Pennsylvania, §2 of DOMA permits Pennsylvania to refuse to recognize the valid marriage celebrated in New Jersey.

  • SSI.  The Social Security Administration (SSA) has taken the position that post-Windsor[2] for a same-sex married couple to be entitled to SSI benefits as a married couple, the applicant must have been married and domiciled in a state recognizing same-sex marriages.  Same-sex marriage is relevant in the SSI context in the application of SSI deeming rules and benefit amounts.[3]  In other words, if a member of a married couple applied for SSI, the income and resources of the other spouse would be deemed to the applicant’s spouse.  This could not have a positive effect, but could have a negative effect on the applicant’s eligibility.  Also, if there are two eligible spouses, the combined SSI benefit is only $1,082 per month for 2014[4] as opposed to $721[5] per month for a single individual or $1,442 for two unmarried individuals.  In this case, the marriage penalty is $360 per month.
  • SSDI.  SSA has taken the position that to be eligible for SSDI, the applicant must have been married in a state recognizing same-sex marriages and domiciled in a state recognizing those marriages.[6]
  • Lump Sum Death Benefits.  With respect to lump-sum death benefits, Social Security will recognize a claim assuming the same-sex couple was married in a state that recognizes same-sex marriages and that the deceased spouse was domiciled at the time of death in a state that recognizes same-sex marriages.[7]
  • SSDI – Spousal Survivor Benefits.  To be eligible, the marriage must have been performed in a state recognizing same-sex marriages and the decedent must have been domiciled in a state recognizing same-sex marriages at the time of death.[8]
  • Medicaid and CHIP.  The Centers for Medicare and Medicaid Services (CMS) has issued guidelines on how Windsor will affect Medicaid and the Children’s Health Insurance Program (CHIP).[9]  CMS has stated that there is two-prong test for many of these public benefits.  One is the state of celebration.  Was the marriage celebrated in a state that recognizes same-sex marriages?  Two is the state of domicile.  Does the same-sex couple reside in a state that recognizes same-sex marriages?

Medicaid is a joint federal/state program.  Funding comes partly from the federal government and partly from the state government.  Therefore, state law in the state of domicile must be considered.

Under the CMS guidance, CMS takes the position that to apply for Medicaid benefits the marriage must have been celebrated in a state that recognizes same-sex marriages and the couple must be domiciled in a state that recognizes same-sex marriages.  Suppose a same-sex couple is married in New Jersey and later applies for Medicaid in New Jersey.  Since New Jersey is the state of celebration and domicile, Medicaid should recognize the marriage.  This means that the assets of the community spouse would be deemed to the institutional spouse, and the community spouse would be entitled to keep the Community Spouse Resource Allowance, which is one-half of the couple’s combined countable assets with a maximum of $117,240 for 2014.[10]

The community spouse would also be entitled to the Minimum Monthly Maintenance Needs Allowance (MMMNA), which until June 30, 2014, is $1,938.75,[11] and which will increase to $1,966.25 for the period July 1, 2014 until June 30, 2015.[12]

  • Medicare.  SSA has announced that Medicare Advantage Plans must provide coverage of post-hospital extended care services to Medicare enrollees through a home skilled care nursing facility, if the enrollee elects to receive coverage from such a facility and if the facility either has a contract with the MA organization or agrees to accept substantially similar payment under the same terms and conditions that apply to similar skilled nursing facilities that contract with the MA organization.[13]
  • Veterans Benefits.  For most federal Veterans benefits, the same-sex marriage must be celebrated in a state that recognizes same-sex marriages, but there is no requirement that the applicant be domiciled in a state recognizing such benefits at the time of application.[14]

CHART

THE EFFECT OF WINDSOR ON TAXATION AND

PUBLIC BENEFIT PROGRAMS

 

Category

Marriage Recognized State of Celebration

Marriage Recognized State of Domicile

Civil Unions and Domestic Partnerships

Income Tax

R

NR

No

Estate Tax

R

NR

No

Gift Tax

R

NR

No

SSI

R

R

No

SSDI

R

R

No

SSDI/Spousal Survival Benefits

R

R

No

SSDI/Lump Sum Death Benefit

R

R

No

Medicaid

R

R

No

CHIP

R

R

No

Medicare/SNF

R

NR

No

Veterans Administration Benefits

R

NR

No

R = Required; NR = Not Required

 


[1] 111 AFTR 2d 2013-2385 (2013).

[2] POMS GN 00210 BASIC (Aug. 2013).

[3] POMS GN 00210 TN 05.

[4] 78 Fed. Reg. 66413 (Nov. 5, 2013).

[5] 78 Fed. Reg. 66413 (Nov. 5, 2013).

[6] POMS GN 00210 BASIC (Aug. 9, 2013).

[7] POMS GN 00210 TN 04 (effective 12-16-2013).

[8] POMS GN 00210 TN 03.

[9] Memorandum to CMS SHO #13-006 re United States v. Windsor  (Sept. 27, 2013).

[10] Medicaid Communication No. 14-01 (Jan. 28, 2014).

[11] 78 Fed. Reg. 5182 (Jan. 24, 2013).

[12] 79 Fed. Reg. 3593 (Jan. 22, 2014).

[13] Medicare Health and Drug Plan Contract Administration Group, Impact on United States v. Windsor on Skilled Nursing Facility Benefits for Medicare Advantage Enrollees (Oct. 29, 2013).

[14] Memorandum for Secretaries of the Military Departments under Secretary of Defense for Personnel and Readiness:  Extending Benefits to Same-Sex Spouses of Military Members, Chuck Hagel (Aug. 13, 2013) and Memorandum for Secretaries of the Military Departments Chiefs of the Military Services:  Further Guidance on Extending Benefits to Same-Sex Spouses and Military Members, Jessica L. Wright, Acting (Aug. 13, 2013).

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