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President Barack Obama has proposed revising the Federal Employees Health Benefits Program and extending health care coverage to federal workers' domestic partners regardless of sexual orientation.
The revision, included in the president's 2014 budget proposal, would add a “self plus one” coverage option to the program's existing single and family health care plans. If implemented, the change would allow gay and heterosexual federal employees and new retirees to enroll their domestic partners in their employer-sponsored health benefit plans beginning in 2015.
At a hearing Thursday before the House Committee on Oversight and Government Reform, a senior official of the U.S. Office of Personnel Management said the revision would improve the federal government's ability to compete for talented workers.
“Currently, the FEHB program is only authorized to offer self-only enrollment and self- and family enrollment,” Jonathan Foley, director of planning and policy analysis at the OPM, said during the hearing. “This proposal would align the FEHB program with best practices in the private sector as larger employers competing for talent are increasingly offering domestic partner benefits.”
Recent surveys tracking employer-sponsored benefit trends indicate that the percentage of U.S.-based employers that offer some form of domestic partnership benefits has increased substantially since 2008.
According to United Benefits Advisors L.L.C's “2013 Health Benefits Survey,” more than 27% of large and midsize employers said they offered dependent health care coverage for domestic partners in 2012, compared with 20% of large employers and 18.5% of midsize employers in 2008.
“It all started with the city of San Francisco mandating that all employers doing business in their city provide coverage for domestic partners,” Thomas Mangan, president and CEO of United Benefits Advisor, said in an email to Business Insurance. “As national companies started to comply, it also became more socially acceptable and now it is almost the norm for employers to provide coverage.”
In its “2013 Corporate Equality Index,” the Washington-based nonprofit Human Rights Campaign reported that 62% of Fortune 500 employers covered domestic partners in their benefit plans in 2012 compared with 57% in 2008.
The Obama administration said proposed “self plus one” revision would permit the government to offer medical benefits to employees' same-sex spouses and domestic partners without conflicting with other laws, namely the 1996 Defense of Marriage Act, which prohibits any federal recognition of legally joined same-sex couples. The law has been challenged on constitutional grounds and is currently being reviewed by the U.S. Supreme Court.
Though constrained by the DOMA provisions, the Obama administration has undertaken several steps in the past year to extend certain benefits to federal employees' same-sex spouses and domestic partners. In February, the U.S. Department of Defense identified 22 benefit programs that it could lawfully extend to active and retired service members' same-sex domestic partners, including emergency leave, child care, legal assistance, and certain death and disability compensation.
In July 2012, the Office of Personnel Management announced that same-sex domestic partners of current and future government workers would no longer have to provide proof of an insurable interest in their partner's continued life in order to receive retirement survivor annuity payments — also called insurable interest annuities — in the event of their partner's death.
Additionally, OPM amended its regulations to define same-sex domestic partners as “family members,” making them eligible for noncompetitive appointments to competitive service positions, evacuation compensation in emergencies and certain employee assistance programs.
The rule changes followed President Obama's instructions to administrative agencies ordering them to identify extensions of benefits to federal employees' same-sex domestic partners that could be made without conflicting with DOMA and other existing laws.
The FEHBP is the largest employer-sponsored health insurance program in the country, encompassing 230 health plans under 95 contracts nationwide. The program covers approximately 8.2 million federal employees, retirees and their dependents.
In its November 2012 budget impact analysis of the proposed Domestic Partnership Benefits and Obligations Act of 2011, the Congressional Budget Office estimated that extending the FEHB program to federal employees' domestic partners would cost the federal government approximately $133 million over the next decade.
Those costs, according to the president's proposed budget, would be more than offset by the $5.2 billion in savings the administration predicts will result from amendments to the FEHBP, allowing the program to pursue more modern health plan types.
“As the health insurance market continues to change, OPM has done its best to keep pace with change,” Mr. Foley said. “However, there are a number of areas where the structure of the program as configured by the original authorizing legislation passed in 1959, constrains OPM from responding to the changed marketplace.”