This summer, the Supreme Court made major rulings on same-sex marriage and health insurance subsidies that are sure to spark discussions as the presidential election heats up.
The first ruling has been long debated and was finally voted on with a 5-4 majority on June 26th. The Supreme Court legalized same-sex marriage in all 50 states, taking away states’ ability to determine the validity of a marriage.
Prior to the Supreme Court’s decision, Social Security and the Veterans Administration followed state determined marital status, which effectively denied benefits to same sex spouses in most states, as well as state benefits in non-recognition states.
With the new law, same-sex couples now have the same legal and financial rights, protections and responsibilities as other married couples. A few examples include:
- Same-sex couples will now be able to divorce, regardless of state of residency
- Same-sex couples must use the same filing status (married filing jointly or married filing separately) for both Federal and required states, instead of filing as jointly for Federal and as single for states that that did not allow for same-sex marriage
- Same-sex couples can administer an estate as a spouse, inherit property utilizing the unlimited marital deduction and function as surviving spouse in terms of inheritance tax treatment
- Same-sex couples can now make medical decisions, bring wrongful death suits and apply for Social Security and Veterans benefits as a surviving spouse
This ruling has made navigating tax season and estate planning much less complex for same-sex couples.
Health Insurance Subsidies
The second major Supreme Court ruling came on June 25th. By a 6-3 margin, the Supreme Court determined that premium tax credits under Code Sec. 36B, also known as health insurance subsidies, are not limited solely to taxpayers who live in States that have established their own health insurance exchange, but rather are also available to taxpayers residing in states with a Federal Exchange. The IRS may now issue subsidies to those who purchased healthcare through HealthCare.gov.
In a new FAQ prepared jointly with the IRS and the Department of Health and Human Services, the Employee Benefits Security Administration has also clarified the requirements for the limitations on cost-sharing and for provider nondiscrimination.
With this law in effect, we will continue to see increases in paperwork and expect to see new planning challenges emerge as the Affordable Care Act is phased in.
With new laws put into place due to the recent Supreme Court rulings, it is important to meet with a tax professional to ensure you receive all the tax benefits available to you. Please consult with a Frazier & Deeter tax advisor to see how recent and future rulings could affect you.
About the Blogger
Terri Lawson is the Partner-in-Charge of the Tax Department. With more than 20 years of experience in preparing and reviewing complex tax returns for individuals, estates and trusts, Terri assists clients in the areas of tax, estate, gift, succession and divorce planning.