Federal benefits, including retirement plans, health insurance, and survivor benefits, play a major role in helping government employees and their spouses enjoy a financially secure retirement. For years, these protections were only available to heterosexual couples, leaving same-sex spouses without access to critical financial support.
While the 2015 Obergefell decision legalized same-sex marriage nationwide, federal benefits for same-sex couples didn’t catch up until 2021. This change finally gave same-sex couples equal benefits, significantly shifting their retirement planning.
How 2021 Changes Shaped Federal Benefits for Same-Sex Couples
While same-sex couples had been able to legally marry since 2015, until 2021, federal benefits programs still required couples to meet eligibility criteria that same-sex spouses couldn’t always fulfill — such as the minimum nine-month marriage requirement for survivor benefits. In 2021, two key legal decisions prompted changes in federal employee benefits for LGBT couples.
Thornton v. Commissioner of Social Security and Ely v. Saul both challenged the denial of survivor benefits to same-sex spouses. The Social Security Administration (SSA) and the Department of Justice ultimately agreed to retroactively extend survivor benefits to spouses who were previously excluded because they couldn’t legally marry. This change also impacted federal retirement plans and health coverage as well as Social Security survivor benefits.
With the new rules in place, same-sex spouses now qualify for survivor benefits even if they were denied in the past, provided they can show they would have married earlier if not for discriminatory laws. Same-sex spouses are also eligible to receive retroactive payments they were previously denied, helping to provide additional financial security in retirement.
Retirement Benefits for Same-Sex Couples
Same-sex spouses now have equal access to retirement benefits under the Federal Employees Retirement System (FERS) and Civil Service Retirement System (CSRS). Both programs provide survivor benefits, offering financial protection for spouses. To make the most of their retirement plans, same-sex couples may consider exploring spousal annuity options. To ensure benefits are passed as desired, it's also critical to make sure beneficiary designations are up-to-date.
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Health Insurance Benefits Under the Federal Employee Health Benefits (FEHB) Program
The FEHB Program now offers equal coverage to same-sex spouses, allowing them to enroll in family health plans. Employees can add their spouses during open enrollment season or after qualifying life events, such as marriage. When selecting a plan, it’s important to compare coverage options, costs, and provider networks to ensure it meets both partners’ healthcare needs.
Life Insurance and Survivor Benefits for Same-Sex Couples
The Federal Employees' Group Life Insurance (FEGLI) program now fully covers same-sex spouses, providing access to spousal and survivor benefits. To ensure benefits are properly directed, employees should list their spouse as a primary beneficiary and regularly review beneficiary forms to keep them up to date with any family changes.
Thrift Savings Plan (TSP) Considerations for Same-Sex Couples
Same-sex spouses now have the same rights to inherit or transfer Thrift Savings Plan (TSP) accounts as any other married couple. Naming a spouse as the primary beneficiary provides key advantages, including the option to transfer the account into their name.
This transfer helps avoid immediate tax liabilities and allows the surviving spouse to manage the funds within the TSP or roll them into another retirement account. Understanding these distribution options may help couples preserve their savings and maintain flexibility for long-term planning.
Estate Planning and Tax Implications
Federal recognition of same-sex marriages allows spouses to benefit from tax-free inheritance and unlimited gift transfers, just like straight married couples. This reduced tax burdens on estates and transfers.
Regularly reviewing wills, trusts, and beneficiary designations helps avoid disputes and ensures that intended beneficiaries receive their share without complications. Couples may also want to consult with an estate planning professional to align their plans with evolving laws and take full advantage of current tax benefits.
Maximizing Federal Benefits for Same-Sex Couples
With equal access to retirement plans, life and health insurance, and survivor benefits, same-sex couples are now better positioned to build a solid financial plan. Reviewing benefit elections regularly helps couples adjust for life changes, ensuring their plans reflect their current goals and needs. Small updates — such as adding newly eligible spouses to health insurance or updating retirement beneficiaries — can make a significant difference in long-term financial security.
Proactive planning helps couples avoid surprises and make the most of available benefits, supporting both short- and long-term goals. Whether you’re just starting your career or preparing for retirement, it’s important to understand your benefits. For personalized guidance, reach out to the team at Serving Those Who Serve at [email protected].
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
