Life partnerships is the all-inclusive term chosen by Mercer LLC to cover same-sex marriage partners, couples in civil unions, opposite-sex unmarried couples cohabiting, and other domestic partnerships. Mercer recently published an extensive study of how employers cover—or don’t cover—such relationships in their benefit programs.
It’s a state-by-state issue. Remember first that the existing federal law, the Defense of Marriage Act (DOMA), bars all life partners from being treated as married couples for purposes of federal taxes and benefits. That law is under challenge in several pending lawsuits, but it stands as of now. So state governments are in charge where benefits offered by employers and taxes levied by each state are concerned.
These states currently permit same-sex marriage: CT, DC, IA, MD (as of 1/1/13), MA, NH, NY, VT, and WA. Five additional states—DE, HI, IL, NJ, and RI—instead offer civil unions, some only to same-sex couples and others to opposite-sex pairs as well. Finally, an additional four states offer registered domestic partnerships: CA, NV, OR, and WA (where at least one partner is 62 or older). Most states do not recognize same-sex marriages performed in other states or countries; the federal DOMA permits them to do so. But those states where same-sex marriage is legal generally do recognize marriages performed in other states.
The complexities of state laws lead to some odd situations: If a same-sex couple enters a civil union in New Jersey, for example, but one of them works in New York and tries to cover the other one for healthcare benefits, he will probably fail. New York, which allows same-sex marriage, requires coverage for same-sex spouses but not for civil union partners, despite the fact that New Jersey guarantees coverage for such partners. By contrast, either of them trying to cover the other under New Jersey law would succeed. Such anomalies occur between other bordering states, such as Massachusetts and Rhode Island.
There are issues with other federal laws. In general, HIPAA doesn’t extend special enrollment rights to life partners, of whatever stripe. But in many states, if a partner is covered by an employer’s plan, state law may require that if and when the partner loses other coverage, a special enrollment right may apply.
Similarly, COBRA doesn’t require employers to offer life partners continuation coverage—except that a terminating employee who had coverage for a partner can make a COBRA election that includes a partner if the partner’s coverage was available to similarly situated active employees. (Employers: If you’re in that situation, make sure your carrier is willing to accept the risk.)
Finally, the Family and Medical Leave Act, or FMLA, doesn’t extend to seriously ill same-sex spouses or other life partners under federal law. But many states have their own versions of such leave laws, and they include life partners. And state civil rights laws will apply in any situation that bars discrimination on terms and conditions of employment that are based on marital status, gender, or domestic partnership.
Why bother offering benefits to life partners? Mercer’s research has found that employers see enhanced recruiting and retention, better employee relations, and the ability among multi-state organizations to offer uniform coverage standards regardless of worksite.
If you choose to offer such benefits, Mercer recommends these steps:
- Determine what laws apply to benefit programs in your state (check the DOMESTIC PARTNER BENEFITS topic for information).
- Create benefit eligibility guidelines to avoid discrimination, especially for such non-ERISA plans as bereavement leave, discounts, tickets, and memberships.
- Refine your plan documents and employee communications. They should clearly define "spouse" and "domestic partner."
- Be prepared for changes; this area of benefits offerings and laws is definitely in flux.
If you decide to add such benefits to your plans, remember that you’re adding a new eligibility class, which may increase your administrative expenses, especially for COBRA. In general, though, your percentage of claims expenses should increase only by the low single digits.