Posted on 02 March 2011
By Mark Miller
When the Obama Administration announced recently that it no longer will defend the Defense of Marriage Act (DOMA) in court, the news drew plenty of celebratory praise from the LGBT community, and brickbats from conservatives.
The court battles over DOMA are far from over. But the Administration’s decision points to the very dramatic gap in retirement benefits available to straight and gay couples–and suggests that change could be on the way.
Many retirement benefits are geared to the earning histories we create during our working lives. And married couples often can take advantage of policies that allow lesser-earning spouses to tap the benefits of the higher-earning partner. Now, the legalization of same sex marriage in some states has raised a key issue surrounding all retirement benefit programs that are sponsored by the federal government, or that involve federal law or regulation.
DOMA defines the word “spouse” as applying only to different-sex married couples for any purpose involving interpretation of federal law. A same sex couple that is married legally in the eyes of Massachusetts or Connecticut can’t access the spousal benefits of programs like Social Security or Medicare–a restriction that can cost hundreds of thousands of dollars in lifetime benefits.
LGBT advocates argue that’s a clear violation of the equal protection clause of the U.S. Constitution. They’ve been pressing their case in several lawsuits that appear to have played an important role in prompting the Obama Administration’s decision.
Two of the key cases were filed by Gay an Lesbian Advocates and Defenders (GLAD), a New England-based legal advocacy organization. GLAD has filed lawsuits on behalf of legally-married same sex couples in Massachusetts and Connecticut; both cases are making their way through the courts.
The Massachusetts plaintiffs are seven married couples and three widowers affected by federal marriage discrimination. A federal court judge ruled in the plaintiffs’ favor last summer, and the case is on appeal.
DOMA impacts several critical retirement benefits for same sex couples.
For example, under Social Security’s rules, when a spouse dies, the survivor is entitled to receive the greater of his or her own benefit, or 100 percent of the spouse’s benefit — including any cost-of-living increases the spouse has received along the way. But DOMA prevents the Social Security Administration from recognizing those rights.
In the case of one of the Massachusetts plaintiffs, Herb Burtis, that means foregoing about $700 in monthly benefits he could otherwise get by filing for the survivor benefits of his late spouse, John Ferris. If Burtis lives to 90, the lost increase in lifetime Social Security benefits from the time of John’s death would exceed $100,000.
Medicare is another big-ticket program where benefits are unequal.
Medicare eligibility is based on the number of quarters in which you have paid payroll taxes into the system. At age 65, anyone with a work history of at least 40 quarters can enroll for Medicare Part A (hospitalization) without paying a premium. Everyone pays a premium for Part B (doctors’ visits), Part D (prescription drugs) or a supplemental Medical policy. But access to the entire program is predicated on Part A enrollment.
The provisions of DOMA dictate that a legally married LGBT spouse with less than 40 quarters of work cannot qualify for spousal benefits and must take the other route into Medicare — buying into the system by paying a hefty Part A premium out of pocket. This year, the monthly Part A premium is $248 for beneficiaries with 30 to 39 quarters of work history, and $450 for those with less than 30 quarters in the system.
The constitutional issues stemming from DOMA also extend to private sector pensions, which are governed by the federal Employee Retirement Income Security Act of 1974 (ERISA). That law requires companies sponsoring traditional defined benefit pension plans to offer workers a survivor option.
This option allows a spouse to continue collecting annuity payments after the primary beneficiary’s death; typically, the employee accepts a lower monthly payment in return for the spousal protection. Although ERISA doesn’t contain a clear definition of what constitutes a spouse, DOMA’s definition governs — and that means same-sex plan participants can’t opt for a survivor benefit unless the plan sponsor has set up something specifically for that purpose.