The U.S. Supreme Court recently ruled that a key provision of the Defense of Marriage Act (“DOMA”) is unconstitutional. This clears the way for same-sex couples in states that legally recognize their marriages to receive over 1,000 federal benefits and protections that were previously denied them. Some of these benefits include Social Security survivor and spousal benefits, Medicare spousal benefits and Medicaid’s long-term care spousal impoverishment protections. But eligibility for these federal benefits and protections is far murkier for couples who were legally married in a state that recognizes same-sex marriage and moved to a state that does not. This uncertainty exists because federal agencies typically defer to the states in determining a couple’s marital status. Accordingly, it is possible that gay couples residing in a state that does not recognize their unions may not be recognized for some federal programs.
The 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:
Federal estate and gift taxes– This was the federal benefit at issue in the case the Supreme Court decided. Same-sex married couples will now be able to transfer money and property to each other – both during their lives and at death – without incurring any gift or estate tax. 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 will also be able to share assets without being subject to gift taxes and will be able to receive tax-free access to a trust’s income or principal.
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 for which they are now eligible because a spouse’s income is counted in determining veterans’eligibility for certain benefits.
Social Security spousal and survivor benefit –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.
Medicaid’s spousal impoverishment protections–Two years ago, the U.S. Department of Health and Human Services announced that it would allow individual states to extend to domestic partners Medicaid long-term care protections available to community spouses. Now these protections will apply to all legally married same-sex couples in any of the states where gay marriage is recognized. This will be welcome news for some couples but not for others, particularly wealthier healthy partners. The asset and income protections primarily help lower-income seniors and, as such, income and asset limits apply. In other words, while same-sex couples will now be able to avail themselves of the same State benefits as other married couples, well same-sex spouses will also be subject to the same liabilities. For example, under the Medicaid rules married couples can transfer assets to each other without penalty and qualify for Medicaid, but they are subject to recovery of their assets by Medicaid as “legally responsible”relatives. On the other hand, the healthy partner in an unmarried couple can keep all of his assets without limitation/liability and only the nursing home partner need spend down his own assets on his care.
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.
Because New York State is one that recognizes same sex marriages, couples will now be able to afford themselves of many federal benefits including the ones enumerated above. In many instances, the outcome will be positive. Nonetheless, there will be situations where the legal recognition of the marriage will have some negative ramifications.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that exclusively concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts and wills. The firm has offices in Forest Hills, Great Neck, Manhattan, Brooklyn, and Cedarhurst, NY. This article was written with the assistance of Debby Rosenfeld, Esq., a senior staff attorney at the firm. For more information visit Ronald Fatoullah in the WELLNESS VILLAGE at ParkinsonsResource.org/general-information/ronald-fatoullah/