Social Security update for same-sex couples

When is a marriage a marriage? In the case of same-sex couples, it can be complicated, particularly if their union pre-dates the nationwide recognition of gay marriage.

On June 26, 2015, the U.S. Supreme Court issued a decision in Obergefell v. Hodges, holding that same-sex couples have a constitutional right to marry in all states and have their marriage recognized by other states. This decision made it possible for same-sex couples and their families to take advantage of a variety of Social Security benefits.

But to claim Social Security benefits as a spouse, surviving spouse or ex-spouse, there are minimum length of marriage requirements that apply to both heterosexual and same-sex couples. Each type of benefit has a different timeline.

To claim benefits on a spouse’s earnings record, the couple must be married at least 12 months and both spouses must be at least 62 years old. However, a spouse of any age who is caring for worker’s child who is under age 16 or a worker’s disabled child of any age may claim benefits once the worker claims Social Security retirement or disability benefits.

To claim benefits as a surviving spouse, the couple must have been married at least nine months and at time of death.

And to claim benefits as an ex-spouse, the marriage must have lasted at least 10 years before the divorce, both ex-spouses must be at least 62 years old and the person claiming spousal benefits on the other’s work history must be single.

In addition, people who were born on or before Jan. 1, 1954, can file for spousal benefits only when they turn 66, making them eligible to collect half of their ex’s full retirement age benefit while their own benefit continues to grow by 8% per year up until age 70. Younger people will never have that option. When they file for Social Security, they will be paid the highest benefit to which they are entitled whether on their own earnings record or that of a spouse. The amount they would receive is based on their age at the time of their claim.

Ex-spouses are also eligible for widow or widower benefits if they were married at least 10 years before divorcing. Although an ex-spouse must be single to collect retirement benefits on a former spouse’s earnings record, they may collect survivor benefits even if they remarry as long as they wait until age 60 or later to take their second (or third) walk down the aisle.

The ability of same-sex couples to marry anywhere in the country also means they have the right to divorce. That prompted an interesting question from a financial adviser in California.

“I have a new client who has been a stay-at-home mom for the most part, so she has limited Social Security earnings history on her own,” the adviser wrote. “She and her partner became domestic partners in 1999, married in 2008 and are now separated,” she explained. “Does she need to hold off on her divorce until 10 years from her marriage? Or do the years of domestic partnership count against the requirement?”

The answer to that tricky question is based on state law. In California, the answer would be yes.

The Social Security Administration now recognizes same-sex couples’ marriages in all states, and some nonmarital legal relationships (such as civil unions and domestic partnerships), for purposes of determining entitlement to Social Security benefits and Medicare entitlement, the agency states in its relatively new publication, “What Same-Sex Couples Need to Know.”

In the case of nonmarital legal relationships (NMLR), the Social Security Act authorizes the agency to consider the claimant to be a spouse if the state where the worker lives would allow the claimant to inherit a spouse’s share of the worker’s personal property if the worker died without leaving a will. Under these circumstances, the agency would treat the couple’s NMLR as a marital relationship for Social Security and Medicare benefit purposes.

California’s recognition of inheritance rights of domestic partners’ dates to Jan. 1, 2000, according to instructions for the agency’s claims representatives that explains how to process such claims. The document contains relative dates for all states.

“When an NMLR qualifies as a marriage for benefit purposes, the ‘duration of marriage’ requirement for the benefit must also be met by the NMLR,” the instructions explain. “Do not use the date of the Windsor or Obergefell U.S. Supreme Court decision when determining duration of marriage. Use the date the couple entered into the NMLR.”

While marriage entitles same-sex couples to claim Social Security benefits and enroll in Medicare just like any other couple, it also means their joint incomes will be considered for tax purposes and could affect how much they will pay for Medicare premiums if their joint income tops $170,000.

(Questions about new Social Security rules? Find the answers in my new ebook.)

Mary Beth Franklin is a certified financial planner.