How gay married couples get shortchanged

Patrick Plain, left, and Seong Man Hong, both of New York, celebrate after getting married at the City Clerk's office in New York Sunday, July 24, 201...
Patrick Plain, left, and Seong Man Hong, both of New York, celebrate after getting married at the City Clerk's office in New York Sunday, July 24, 2011. Jason DeCrow / AP

More than 1,000 federal rights and securities are denied to couples in same-sex marriages not legally recognized by Section 3 of the Defense of Marriage Act, or DOMA, says Vickie Henry, senior staff attorney at Boston-based Gay & Lesbian Advocates & Defenders, or GLAD. GLAD is a leading advocacy group in the campaign to strike down DOMA.

"Few of those benefits are more important than Social Security," says Crosby Burns, policy analyst of the LGBT Research and Communications Project at the Center for American Progress, an independent, nonpartisan educational institute based in Washington, D.C.

"This program forms part of the bedrock of our nation's safety net," Burns says. "With full and equal access to this social insurance program, families headed by same-sex couples would finally have access to the economic safeguards they need, intended to keep them out of poverty and afloat during hard times."

Chief among them, Henry says, are the spousal benefit, the spousal disability benefit, the lump-sum benefit and the survivors benefit. The children of same-sex parents would also be affected.

Read on to see how the Social Security system works in favor of heterosexual married couples and against same-sex married couples. If DOMA is struck down, gay couples stand to gain more Social Security benefits.

The spousal benefit
The spousal benefit allows marriage partners more flexibility in planning for retirement. Heterosexual married couples can collect benefits in a number of ways. For example, at full retirement age, lower-earning spouses can collect a benefit based on their own record or half of their higher-earning spouse's benefit -- whichever is larger. So nonworking spouses can collect based on the earnings of the working spouse. Also, higher-earning spouses can, at full retirement age, "file and suspend," enabling their lower-earning spouse to collect benefits while they continue to work and accrue additional retirement credits.

This makes it a great financial planning tool because the second spouse can wait longer before taking his or her own benefits. "If your partner is of the same sex," Henry says, "you can't do what other couples can do, which is to use your spouse's benefit to maximize your benefit. You don't get that protection."

"Quite a bit of money could be at stake," says David Rae, a Certified Financial Planner professional and vice president of investments for Trilogy Financial Services in the Los Angeles area, "especially if one partner stayed home."

The spousal disability benefit
When the primary wage-earner in a family becomes disabled, Social Security provides relief for his or her spouse through the spousal disability benefit. Even a divorced spouse of a different sex may be eligible for this benefit.

"This is a huge safety net," Henry says. "Disability is a problem that tends to affect workers in their prime, and most people don't carry enough disability insurance to provide for that. Yet this is something that same-sex couples don't have access to. These are working couples who can't get this basic protection, even though they are married and have merged their finances like other couples who are considered eligible."

Lump-sum death benefit and survivors benefit
When the first spouse dies, Social Security's lump-sum benefit pays $255 to the surviving spouse. A surviving child may also receive this benefit.

The survivors benefit ensures that the surviving spouse is eligible for monthly Social Security benefits based on the earnings of the deceased spouse beginning as early as age 60, if the marriage lasted at least nine months.

Typically, says Henry, one partner in a marriage has much higher lifetime earnings than the other, and therefore a higher monthly Social Security check. If the higher-wage earner passes away, the survivor will then start getting checks for that higher amount. But if the partners were of the same sex, that supporting income doesn't materialize.

Related: Same-sex marriage: Hollingsworth v. Perry

Children of same-sex partners
The children of same-sex marriages will be profoundly affected should DOMA be overturned. Right now, their legal position is complicated.

"If both partners have adopted them," Rae says, "(the children) may be able to get the survivors benefit, but there are some hoops to jump through."

Two factors block access to Social Security benefits for these children, says Burns.

"First, state laws do not always provide same-sex couples adoption rights that establish a legal relationship between parent and child. Second, DOMA complicates the absence of adoptive rights by not recognizing the legal relationship between two legally married same-sex individuals.

"Should the Supreme Court rule that Section 3 of DOMA is unconstitutional, these children will finally be afforded access to safety-net programs intended to keep them out of poverty," Burns says. "This includes Social Security benefits, which offer thousands of children the economic support they need when their parents are no longer able to financially provide for them due to old age, disability or death," he says.

Related: Rights of same-sex couples in high court's hands

Impact on same-sex couples
The finances of same-sex marriage partners are crippled because their unions are not legally recognized under DOMA. One example: "For every $100 in retirement benefits a month they do not have access to," Rae says, "a gay couple has to have saved $24,000 or so to be in the same position at retirement as an opposite-sex couple (who is) depending on Social Security."

That $24,000 is the lump-sum amount needed to generate the $100 monthly income, assuming a withdrawal rate of 5 percent. If the challenge to DOMA is successful, there will still be some hurdles, Rae says.

For example, a widow or widower older than 60 who was married for more than 10 years, and who has remarried, has the option to continue to collect survivors benefits or to collect based on the new spouse's earnings. A divorced person who was married for 10 years can also claim spousal benefits.

"If DOMA is struck down," Rae says, "will they start that clock again? There may have to be new laws written for some people to get their benefits."

Related: 7 little-known Social Security benefits

The social impact
The Williams Institute, a think tank at the University of California, Los Angeles School of Law, estimates that there are approximately 650,000 same-sex couples in the U.S. today -- including 114,100 legally married and 108,600 in civil unions or registered domestic partnerships. If Section 3 of DOMA is repealed, "114,100 additional couples will be eligible for the range of safety-net programs and benefits that fall under Social Security's umbrella," says Burns.

Since Social Security currently serves more than 56 million Americans, "This would hardly impact the financial standing of the Social Security program. More importantly, social insurance programs like Social Security are an ultimate net gain to the economy by keeping people out of poverty, protecting against the vicissitudes of health, old age and disability."