1. This UBA Employer Webinar Series is brought to you by United Benefit Advisors in conjunction with Jackson Lewis For a copy of this presentation, please go to www.UBAbenefits.com. Go to the Wisdom tab and scroll down to HR Webinar Series and click. Under Employer Series click the Registration and Presentation link. Click the red Presentation button to see the slides.

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3. Represents management exclusively in every aspect of employment, benefits, labor, and immigration law and related litigation. 800 attorneys in 55 locations nationwide. Current caseload of over 6,500 litigations and approximately 415 class actions. Founding member of L&E Global. 3

4. 4 55 Locations Nationwide* *Jackson Lewis P.C. is also affiliated with a Hawaii-based firm

5. This presentation provides general information regarding its subject and explicitly may not be construed as providing any individualized advice concerning particular circumstances. Persons needing advice concerning particular circumstances must consult counsel concerning those circumstances. Indeed, health care reform law is highly complicated and it supplements and amends an existing expansive and interconnected body of statutory and case law and regulations (e.g., ERISA, IRC, PHS, COBRA, HIPAA, ADA, GINA, etc.). The solutions to any given business’s health care reform compliance and design issues depend on too many varied factors to list, including but not limited to, the size of the employer (which depends on complex business ownership and employee counting rules), whether the employer has a fully-insured or self-funded group health plan, whether its employees work full time or part time, the importance of group health coverage to the employer’s recruitment and retention goals, whether the employer has a collectively-bargained workforce, whether the employer has leased employees, the cost of the current group health coverage and extent to which employees must pay that cost, where the employer/employees are located, whether the employer is a religious organization, what the current plan covers and whether that coverage meets minimum requirements, and many other factors. 5

6. Impact of Obergefell on group benefit plans Effects of states that did not previously recognize same-sex marriage versus and those that did ERISA obligations versus general anti-discrimination regulations Considerations for “domestic partners” who are not spouses Plan enrollment issues for individuals with same-sex spouses now, and in the future Best practices for employers regarding same-sex harassment prevention 6

7. United States v. Windsor, 133 S. Ct. 2675 (2013) o Strikes down Section 3 of the Defense of Marriage Act. o Flurry of IRS and DOL guidance follows http://www.irs.gov/uac/Answers-to-Frequently-Asked-Questions-for- Same-Sex-Married-Couples (Page Last Reviewed or Updated: 06- Feb-2015)http://www.irs.gov/uac/Answers-to-Frequently-Asked-Questions-for- Same-Sex-Married-Couples o Leaves Section 2 of DOMA in tact – states do not have to recognize the lawful same-sex marriages entered into elsewhere. o Does NOT require health and welfare plans to cover same-sex spouses, civil union partners, or domestic partners. 7

8. Obergefell v. Hodges, 135 S. Ct. 2584 (2015). Two key holdings: 14 th Amendment requires states o To license marriages between two people of the same sex. o To recognize a marriage between two people of the same sex that was lawfully performed out-of-state. This means that o same-sex couples who reside in states that previously didn't allow same-sex marriage can now marry, and, presumably divorce. o states may not refuse to recognize lawful same-sex marriages performed in another state. 8

9. Void ab initio (Invalid from the outset) o Laws declared unconstitutional have no effect. See, e.g., Norton v. Shelby Co., 118 U.S. 425 (1886) (“An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection, it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed.”). Not so fast… o Other cases have rejects this categorical approach. Chicot Co. Drainage Dist. v. Baxter State Bank, 308 U.S. 371 (1940); U.S. v. Baucum, 80 F.3d 539 (D.C. Cir. 1996). We may soon have an answer: o Cote v. Wal-Mart Stores, Inc., No., 1:15-cv-12945-WGY, D. Mass., Filed 07/14/15 9

10. Examples of where addressing retroactivity questions will be thorny o Community property laws – when will they apply to a same sex couples – the date Obergerfell was decided, June 26, 2015, date of the marriage, arrival in the community property state, some other point? o Trust and estate laws – In states where same sex spouses were not recognized and could not be heirs, will estates have to be reopened now that they would have been heirs? What about those who acquired and relied on the rights to the property. This also could affect qualified domestic relations order (QDRO) determinations. 10

11. No protection from private discrimination o Decisions address ability of federal and state governments to discriminate against same sex couples concerning marriage. o Neither case created a requirement for employers to provide the same benefits for same-sex spouses as are provided for opposite-sex spouses. 11

12. Many states and localities already have protections o Recognition of same-sex marital rights. http://www.freedomtomarry.org/states/ http://www.ncsl.org/research/human-services/same-sex-marriage- laws.aspx#1http://www.ncsl.org/research/human-services/same-sex-marriage- laws.aspx#1 o Prohibitions on discrimination against persons because of sex, sexual orientation, and similar characteristics. http://www.lambdalegal.org/states- regions?gclid=CPTtmfvjmccCFQoTHwodiuUAzwhttp://www.lambdalegal.org/states- regions?gclid=CPTtmfvjmccCFQoTHwodiuUAzw o Prohibiting discrimination against a person because of marital status. 12

13. Practical implications for group health plans o ERISA preemption? Plan terms. o State insurance laws – some may try to extend to self-funded plans. Example: Washington announcement (June 5, 2014). o ACA regulations – 45 CFR 147.104(e) – a health insurance issuer offering non-grandfathered group or individual health insurance coverage cannot employ marketing practices or benefit designs that discriminate on the basis of certain specified factors. o ERISA Section 510 claims – prohibits discrimination against participants and beneficiaries for exercising rights under an ERISA plan or for the purpose of interfering with such rights. 13

14. Cafeteria Plans: participants married to same-sex spouses on date of Windsor decision would be allowed to make election changes. Health FSA, DCAPs and HSAs: reimbursements for otherwise eligible expenses permitted if incurred by same-sex spouses. Contribution limits apply to same-sex spouses as they do to opposite-sex spouses. 14

15. Few changes o Following Windsor, IRS and DOL made clear that legal same- sex marriages would be recognized under ERISA and federal tax law regardless of a couple’s state of residence. o State tax law adjustments. o May have to review other benefits, fringe benefits. o Some are considering whether to continue domestic partner benefits. 15

16. Decision: Continue to offer coverage for spouses? o Coverage still could provide MEC or minimum value coverage. o Problematic for recruitment, retention, etc.? Decision: Add Spouses only or Domestic Partners As Well? Impacts of Decision: o COBRA, HIPAA. o Plan terms, amendments, definitions. o Stop-loss carrier. o Coordination between benefit plans and other fringe benefits, including handbook policies. 16

17. Who are domestic partners/civil unions? o Persons of same or opposite sex who enter in to registered domestic partnerships or civil unions recognized under state law who are not considered as married under the laws of that state. o Similar relationships recognized under plan terms. o Does not include common law spouses. o Relationships unaffected by Windsor or Obergefell. o Can't file federal tax returns using married filing jointly or married filing separately status. See, e.g., IRS Letter Ruling 9850011. http://www.irs.gov/uac/Answers-to-Frequently-Asked-Questions-for- Registered-Domestic-Partners-and-Individuals-in-Civil-Unionshttp://www.irs.gov/uac/Answers-to-Frequently-Asked-Questions-for- Registered-Domestic-Partners-and-Individuals-in-Civil-Unions o Be careful with common law marriages. 17

18. Same-sex versus opposite-sex debate. o Equal protection for opposite sex domestic partners? No direct impact from Windsor or Obergefell, cancel? Adverse selection. State nondiscrimination laws? o Example – NJ Law Against Discrimination (NJ LAD): Domestic partners within protected class. o But law does not apply to bona fide benefit plans. o Rutgers Council of AAUP Chapters v. Rutgers, The State University, 298 N.J. Super. 442 (1997) (denial of health benefits to domestic partners of employees did not violate the NJ LAD). ERISA preemption. 18

19. For plans that continue to provide or add coverage for domestic partners/civil unions: o Eligibility: Those who meet state registration requirements only. Employer-formulated definition. Both. o Documentation – eligibility and termination. o Coordination with other benefits – consistency in definition. o Federal and possibly state tax issues. o COBRA. o HIPAA. o Enrollment issues, proof of eligibility. 19

20. Post-Windsor o DOL Fact Sheet #28F: Qualifying Reasons for Leave under the Family and Medical Leave Act (Aug. 2013) - for FMLA purposes, the term “spouse” did not include same-sex spouses residing in states that did not recognize same-sex marriage. o Proposed regulations - change to the definition of spouse in its FMLA regulations that would determine spousal status based on the law of the state or country where the marriage was entered into, regardless of where the couple resides. o Final regulation - change implemented, effective March 27, 2015. 20

21. Eligible employees, regardless of where they live, can o take FMLA leave to care for lawful same-sex spouse with a serious health condition. o take qualifying exigency leave due to their lawful married same-sex spouse’s covered military service. o take military caregiver leave for lawful same-sex spouse. o take FMLA leave to care for their stepchild (child of employee’s same-sex spouse) regardless of in loco parentis requirement of providing day-to-day care or financial support for the child is met. o take FMLA leave to care for a stepparent who is a same-sex spouse of the employee’s parent, regardless of whether the stepparent ever stood in loco parentis to the employee. 21

22. Revisit policies and working conditions that affect spouses: employee benefits, leave of absence, fringe benefits, etc. Analyze the laws in the applicable jurisdictions, and watch for new developments likely to come. Employee training. Ensure vendors acting consistent with new requirements, policies. 22

23. To obtain a recording of this presentation, or to register for future presentations, contact your local UBA Partner Firm. Thank you for your participation in the UBA Employer Webinar Series If your question was not answered during the webinar or if you have a follow-up question, you can email the presenters today or tomorrow at: UBAwebinars@jacksonlewis.com www.UBAbenefits.com www.jacksonlewis.com