EMPLOYERS MORE AT EASE WITH PARTNER BENEFITS: EXPERTPosted On: Sep. 21, 1997 12:00 AM CST
ATLANTA-Employers are becoming more comfortable offering domestic partner benefits and are realizing it's not as big a financial concern as once feared, according to a legal expert on domestic partner issues.
Employers first "dribbled onto domestic partnership benefits" that first appeared in the early 1980s, then "jumped on the bandwagon, and now it's a train steaming down the line and gathering momentum year after year," said Thomas F. Coleman, an attorney and executive director of the Spectrum Institute, a Los Angeles-based organization that works to overturn laws and business practices that discriminate against unmarried people.
Mr. Coleman, speaking at the Self-Insurance Institute of America Inc.'s annual conference in Atlanta earlier this month, pointed out that three years ago, about 200 public and private employers offered domestic partner benefits. "There are now over 600."
In recent months, several large employers have begun offering the benefits, Mr. Coleman noted. High-technology firms, oil companies and banks are among them.
"Why are large companies doing this?" he asked. "Obviously corporations are not in business to just throw money away."
One reason for offering the benefits is to satisfy workers, Mr. Coleman said. Employers also have to respond to competitors offering the benefits, and there is the threat of lawsuits by workers who feel they are being treated unfairly if they don't get the same benefits as married co-workers.
Companies that decide to offer domestic partner benefits should not fear being saddled with heavy costs, according to Mr. Coleman.
He referred to a 1994 research paper compiled by Hewitt Associates L.L.C. that indicates that "contrary to warnings and predictions by insurers and others, extending coverage to domestic partners has not resulted in statistically significant differences in cost."
In fact, the research says, "experience indicates the cost of domestic partner benefits is lower than was anticipated. Part of the lower cost can be attributed to the fact that eligible employees tend to be younger and, as a result, healthier."
Costs are lower than expected also because enrollment rates generally are only as high as around 2% to 3%-and in many cases less than 1%, according to the Hewitt research.
Mr. Coleman pointed out that enrollment rates are low partly because domestic partner benefits in most situations are taxable under federal law.
He said employers have worried they would be providing expensive benefits to AIDS victims but have found that risk is not as great as perceived, because "people basically are living a monogamous lifestyle. . .and there just isn't the problem people anticipated."
The cost of treating AIDS cases has fallen to a total of about $100,000 per case, he noted, much lower than the cost of care for conditions such as high-risk pregnancies that heterosexual couples can experience.
Employers also are seeing that fears of fraud related to domestic partner benefits are unfounded, Mr. Coleman said.
"There are restrictions that are built in that help prevent fraud and abuse," he noted.
Partners generally are required to sign affidavits, for example, that indicate they are in a committed relationship and are responsible for each other's welfare. Some employers offer the benefits only to couples who live together.
Mr. Coleman said the studies he has seen from consulting firms that have examined companies offering domestic partner benefits have not uncovered any fraud or abuse by employees receiving the benefits.
But not all employers are comfortable with offering the benefits.
Employers in Hawaii are challenging a state law that took effect earlier this year and forces them to provide health care benefits to anyone an employee deems a "reciprocal beneficiary."
The beneficiary does not have to have a connection with the employee and is not required to live in Hawaii.
Employers are claiming in a lawsuit that the law creates a legal, financial and administrative nightmare (BI, July 21).
Employers also are waiting on a ruling by Hawaii's Supreme Court that will determine whether gay couples can marry in the state.
Mr. Coleman also pointed out that the Hawaii Legislature has agreed to put a constitutional amendment on the 1998 ballot that would let voters decide whether to allow same-sex marriages.
That means a court ruling that says the marriages can take place could induce couples throughout the country to travel to Hawaii, where they could be married before the opportunity potentially vanishes if voters reject it on the November 1998 ballot.
Mr. Coleman said such a "window of opportunity" could bring tens of thousands of people to Hawaii to be married.
That could present a dilemma for employers when those couples return home to other states and present a marriage certificate and a demand for non-taxable benefits that heterosexual married couples receive, he noted.
If that scenario occurs, "everyone is going to be in the middle of the issue," Mr. Coleman predicted. Employers, unions and state governments suddenly will find themselves dealing with how to recognize the marriages and provide benefits, he said.
Employers will be faced with a demand by the federal government, which does not recognize same-sex marriages, to tax the benefits, Mr. Coleman said. "The employee or the union may wind up suing the company and the federal government to have this decided. So there will be litigation going on all around the country for years if this happens in Hawaii."
Rick Lyons, vp-sales at ING Medical Risk Solutions in Atlanta, moderated the session.