A Valentine Special: Domestic Partnership Insurance Revisited
Since the e-Insure Journal first visited the domestic partner issue in July 2003, gay marriage has come to dominate headlines nationwide. Many see 2004 as the year that “moral values” re-emerged as a potent political and social force. We thought this would be a good time to take another look at domestic partnerships this side of Janet Jackson’s Super Bowl snafu and eleven states passing legislation to protect traditional marriage. First we’ll look at the state of domestic partnerships in the U.S., followed by some considerations for both employers and employees regarding domestic partnership insurance.
Howdy, “Domestic” Partner!
The term “Domestic Partner” first entered the American lexicon in 1981, when San Francisco was considering legislation to give benefits and protections to unmarried adults living together in committed relationships (both same-sex and opposite-sex). The Village Voice in New York City became the first private employer to offer domestic partner benefits to its employees.
By 1990, less than two dozen U.S. employers provided domestic partner benefits, and none of these were Fortune 500 companies. A lot changed over the next ten years. In 2000, over 3,500 employers offered domestic partner benefits, including 102 (20%) of the Fortune 500. There’s no indication of a slow-down. In May of 2004, the Human Rights Campaign (HRC) estimated that 5,400 employers were offering some sort of domestic partner benefits. The U.S. Census Bureau estimates that one quarter of all Americans now work for an employer offering domestic partner benefits.
This is all good news for the nearly 11 million adults living with their unmarried partners (in 9.7 million opposite-sex and 1.2 million same-sex relationships). But it also means that there are still a large number of employers that don’t offer such benefits, and a larger number of employees who don’t receive them. Even with the more conservative swing of the nation’s moral compass in 2004, there’s every indication that domestic partnerships are still on the rise and will continue to gain a foothold within the American workplace. In fact, some say that the backlash against gay marriage may actually accelerate domestic partnership benefits, as they’re the most widely accepted alternative at the moment.
Employer considerations: Q & A
Are private employers ever forced to provide domestic partnership insurance benefits?
No.
Then why are so many employers embracing domestic partnerships?
Because they’re finding that it makes good business sense, for the following reasons:
- Employees view such policies as being fundamentally fair, producing…
- Improved employee relations, which…
- Help recruit prospective employees, and…
- Help retain productive employees, which…
- Enhances the company’s image, and…
- Helps secure business contacts with certain state and local governments.
Basically, it’s a win-win situation all around.
Why are some companies hesitant to offer domestic partnership insurance benefits?
- They fear increased health care costs due to higher program participation rates.
- They fear abuse of the system.
- They fear the administrative hassles.
- They are concerned about the moral dimension.
What are the cost implications for employers?
The answer to this depends on how the company defines domestic partnerships and on the specific benefits they offer.
Some companies only provide domestic partnership insurance benefits to same-sex couples, figuring that opposite-sex couples can legally marry in order to qualify for spousal benefits. On average, companies that offer same-sex benefits are experiencing just over a 1% increase in enrollment. That’s because many of their gay and lesbian employees don’t have a domestic partner, or have one who is covered elsewhere. Companies are also finding that domestic partners aren’t breaking the bank. If anything, the additional costs are less than average. That’s because same-sex domestic partners tend to be younger, healthier, and—surprise!—less likely to get pregnant.
Employers also need to decide if they will offer benefits to any dependent children of domestic partners.
What benefits do most companies offer?
At a minimum, most offer basic health insurance coverage, including vision and dental. Others offer family and bereavement leave, pension, disability and life insurance, relocation and travel expenses, tuition reimbursement, credit union membership, COBRA, access to employer facilities, and attendance at employer functions.
How do employers prevent people from taking advantage of the system?
Some employers fear that employees will sign up good friends or roommates that they aren’t really in a committed relationship with. To minimize fraud, employers establish a clear definition of what constitutes a domestic partnership, and often require sort of proof. An increasing number of local governments now offer domestic partner registries. These can provide a very good source for documenting the validity of the relationship. At the very least, the partners should be over 18, unrelated by blood, in an exclusive/committed relationship, sharing the same address, and financially inter-dependent. It’s a good idea to seek legal advice when determining how to document the validity of domestic partnerships without invading employee privacy.
What else are employers doing make their domestic partner benefit programs successful?
Lots of things, including:
- Making sure that all current benefit providers offer domestic partner benefits.
- Rewriting all anti-discrimination and EEO statements to prohibit discrimination based on domestic partner status.
- Training staff, supervisors, and upper management about domestic partnerships, their value to the organization, and the importance to not discriminate if an employee has a domestic partner.
- Assigning at least one contact person in the organization (typically in HR) to coordinate all domestic partner issues and paperwork.
- Updating and distributing policy manuals to include domestic partner benefits.
- Having a system in place, including necessary forms, in the event that a domestic partnership is terminated.
- Making sure that they collect the necessary withholding taxes on domestic partner health benefits. A few words will be said about tax implications under employee considerations, but the specifics are beyond the scope of this article. Any organization offering domestic partner benefits should consult with a tax advisor or an accountant.
Employee considerations
If you’re in a domestic partnership, check with your city and/or county government to see if they have any type of registry. If they do, it’d be a good idea to get registered in order to document your partnership. This will help prove your status to an employer offering domestic partner benefits, on mortgage applications, etc.
Whether or not you qualify for domestic partner benefits at work, it’s also a good idea to work up some sort of legal partnership document to validate your relationship. It should include things like:
- Inheritance and estate issues.
- Power of attorney.
- Provisions for any children.
- Property considerations.
- Provisions for the possible dissolution of the partnership.
- Provisions for death and disability (funeral arrangements, hospital visitation rights, etc.).
If your company offers domestic partnership benefits, make sure you fully understand the tax implications before signing up for them. State tax implications will vary, but the Federal Government is clear. Currently, the IRS doesn’t recognize domestic partnerships. This means that non-dependent partners can’t jointly file their tax returns, and it also means that a partner’s insurance benefits are treated as taxable income and need to be reported by the employer on the employee’s W-2 form. Employees with domestic partners may want to have more money withheld on their W-4 forms to account for this added “income.”
It’s precisely because of these tax inequities that many gay and lesbian advocates continue to lobby for all the rights and protections afforded married couples. Legally recognized civil unions or marriages may be a long way off in most states. Until then, domestic partnerships will become an increasingly important part of the American landscape.
