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Many employers keep or expand benefits to domestic partners to retain talent

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As marriage equality gains momentum in courts and legislatures nationwide, it remains to be seen how the changes will affect employers' long-term benefit strategies for same-sex and opposite-sex domestic partners.

For now, most employers that already provide health care, retirement and other benefits to same-sex and opposite-sex domestic partners appear committed to maintaining those benefits, according to a recent survey by the Brookfield, Wisconsin-based International Foundation of Employee Benefit Plans.

In some cases, employers even have extended benefits to previously uncovered domestic partners, particularly unmarried opposite-sex couples.

About 50% of employers offer benefits to opposite-sex domestic partners, up from 45% last year, according to the foundation's survey.

Employers' reasons to maintain or expand benefits coverage for same-sex and/or opposite-sex domestic partners vary. Experts say the most frequent rationales among their clients include recognition of evolving family structures and mounting pressure to attract and retain highly skilled talent.

According to the survey, “the top reason employers are choosing to continue to offer these benefits is that they recognize that family dynamics are changing, and that was followed closely by employers that thought it was the right thing to do,” said Julie Stich, the foundation's director of research.

“That shows that a majority of employers want to be more inclusive in their employee benefit strategies.”

Additionally, experts say employers operating in multiple states want uniformity in their benefit plans, due to differing state marriage laws. Such was the case when retailer Wal-Mart Stores Inc. announced last August that it would extend all medical and voluntary benefits to same-sex and opposite-sex domestic partners this year.

“By developing a single definition for all Wal-Mart associates in the U.S. and Puerto Rico, we are able to ensure consistency for associates in various markets,” Wal-Mart said in a memorandum to employees.

For employers covering just one group of domestic partners — typically same-sex partners, experts say — a key factor in determining benefits eligibility for domestic partners going forward will be the extent of their exposure to state and/or federal discrimination lawsuits.

“In an effort to mitigate that liability, in some cases employers have extended the health coverage to opposite-sex domestic partners,” said Roberta Chevlowe, senior counsel in Proskauer Rose L.L.P.'s labor and employment law department in New York.

Conversely, Ms. Chevlowe said, other employers have discontinued domestic partner coverage entirely.

“It's going to depend on the way an employer's health plan is drafted, whether or not they're fully insured or self-insured, and the geographic location of both the employer and their employees,” she said. “It's definitely becoming a big issue.”

The University of Minnesota announced in November that it would discontinue coverage for same-sex domestic partners at the end of 2014 in light of the state's legalization of gay marriage earlier that year.

More recently, the government of Allegheny County, Pennsylvania, notified employees in June that it would terminate health and dental coverage for same-sex domestic partners, following a federal court ruling striking down the state's gay marriage ban.

“Now that same-sex marriage is legal in Pennsylvania, I believe that it is important to continue to keep our employees on equal footing, and that means requiring proof of marriage for coverage of a spouse, partner and/or family members,” Allegheny County Executive Rich Fitzgerald said in a statement.

Experts say some employers are considering more inventive approaches to minimize their liability exposure while maintaining benefits for domestic partners.

“We do have some employers that simply adopted a "plus-one' standard, where they essentially allow each employee to extend coverage to one other person,” said Sibyl Bogardus, Salt Lake City-based chief compliance officer and consultant at Hub International Ltd.

“It does tend to cost a plan a bit more, because employees often choose a sick friend or family member, so some employers have learned to put some parameters around the "plus-one' standard.”

James Harmon, president of the Cleveland-based Dawson Consulting Group, a subsidiary of AssuredPartners Inc., said he's had several discussions with clients about “grandfathering” coverage for same-sex and opposite-sex domestic partners until gay marriage becomes legal in the relevant state.

After that, he said, the companies would revert to requiring legal marriage to receive benefits.

“Employers are trying to figure out how to do this in the best way for their employees and their families,” Mr. Harmon said.

“Ultimately, you have to decide what's most important to you as an organization and what's most important to your employees.”