Table of Contents
History of Benefits for Same Sex Couples
The HR Implication of Gay Marriage
Eligibility Criteria for Domestic Partner Coverage
Implementation Decision Points
Tax Treatment of Domestic Partner Coverage
Advantages to Offering Domestic Partnership Benefits
U.S. households have seen a rapid increase due to the rise of non-married couples, both same-sex and opposite-sex. This has created a challenging environment for employers as they try to keep pace with the changing profile of the work force. A major benefit of marriage is access to health coverage through a spouse’s plan. Now that gay and lesbian couples can legally marry in most states, it seems natural to assume that they have the same access to health insurance as other married couples. Yet, the law in this area is still evolving, and there are many questions for which there are no clear answers. Great efforts have been made to establish employee benefit policies that do not discriminate against current employees or applicants based on age, race, marital status, sexual orientation, disability, national origin or religion. In order to maintain equality and equity in monetary and non-monetary benefits, it is necessary for employers to reconsider how indirect compensation is distributed to non-traditional households. An example of a non-traditional household would be domestic partnerships. At the center of this issue is employers need to remain competitive in attracting and retaining qualified talent. Does the employer have an ethical obligation to provide benefits to same-sex partners?
History of Benefits for Same-Sex Couples
Employee benefit programs have existed for quite some time now. According to the Employee Benefit Research Institute, the first recorded employee benefits included the Plymouth Colony settlers’ military retirement plan in 1636; Gallatin Glassworks’ profit-sharing arrangement initiated in 1797; American Express Company’s pension plan in 1875; and Social Security retirement payments in 1935. Today, nearly two-thirds of Americans are covered under employer-sponsored benefit programs (Employee Benefits Research Institute, 2011).
The history of employee benefits for same-sex couples is not as extensive in comparison to the history of regular employee benefit programs. In 1982, the Village Voice, a New York based weekly newspaper was the first U.S. Company to offer health benefits to same-sex partners of its employees. The first town to do this as well was the city of Berkeley in California, this took place in 1984. Following in 1995, Vermont became the first state to offer same-sex benefits to its public employees. Then finally in 1997 the State of Hawaii was the first state to offer domestic partnership benefits to all same-sex couples (Holder, 2011). Arising from the notion that equal work should mean equal pay has generated a growing awareness for the movement toward same-sex benefits in the workplace. Supporters feel strongly that this movement also includes employment benefits. For many these types of benefits could amount to 25% to 40% of their total compensation. As of 2011, a majority of Fortune magazine’s largest publicly traded companies provide health insurance benefits to same-sex employees (Human Rights Campaign, 2011). The Defense of Marriage Act commonly known as (DOMA), 28 U.S.C.A 1738C (1996) was a touchstone for gay rights activism in employee benefits. DOMA defines “marriage” as a legal union between a man and a woman and a “spouse” as a person of the opposite sex who is a husband or wife. The DOMA law directly applies to COBRA, HIPPAA, and ERISA. DOMA does not prohibit employers from offering coverage and benefits to same-sex spouses or domestic partners, but it does prevent employers from offering certain types of benefits to domestic partners who are not dependents of the employee,...
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