“IT’S not easy being gay,” said Mary Jo Hudson, director of the Ohio Department of Insurance. She wasn’t referring to political opposition and other obstacles, but the plight of same-sex couples who are trying to get and keep ohio health insurance.
“You’ve got to go through a lot of hoops,” said Ms. Hudson, who is gay and has lived with her partner for eight years.
Same-sex couples have been making headlines; Maine followed the lead of Iowa and Vermont this week in legalizing same-sex marriage, and several other state legislatures are now considering it. But Ms. Hudson says that fairer and more comprehensive health care coverage for partners — whether they are legally married or not — is not necessarily part of the package.
“For the vast majority of gay couples,” she said, “getting health insurance for a domestic partner is still a challenge.”
Currently about one-third of companies with more than 500 employees offer domestic partner benefits. That’s up from about 12 percent in 2000, according to a study from Mercer, an employee benefits consulting firm. But the percentage drops off sharply when smaller employers are counted, Ms. Hudson said.
And there is no provision for domestic partner benefits for federal employees, although there are some legislative efforts to change that. Some states and municipalities offer their employees domestic partner coverage, depending on the state laws.
Even if the relationship is formalized with the state in a marriage or union, that does not always obligate the employer to cover a same-sex spouse. For one thing, self-insured employers are not regulated by the states.
And other benefit-providing employers that choose not to offer such coverage can sometimes use the Defense of Marriage Act — a law that forbids the federal government to recognize same-sex marriage — to trump state laws, said Ilse de Veer, a principal with Mercer.
On the flip side, self-insured employers are free to offer domestic partnership benefits, whether or not a state recognizes unmarried relationships. And some employers limit their domestic partner benefits only to homosexual couples, on the rationale that heterosexual couples can get married, while in most states gay couples still cannot.
If you’re part of a same-sex couple and you’re fortunate enough to work for an employer that will provide coverage for your partner, the process can still be cumbersome and costly. Here are some of the basics.
DOCUMENT YOUR RELATIONSHIP Many employers and insurance companies require proof of a domestic partnership before you can qualify for benefits. One of the most common documents is an affidavit signed by both partners, explaining the details of the relationship. For more information on what needs to be included in an affidavit, the Web site insure.com offers a check list.You may also need to provide copies of jointly signed leases, homeowners’ insurance policies, joint bank account statements and other legal documents that show the two of you live together and are financially intertwined.
Many states, counties and cities, including New York City, have domestic partnership registries where unmarried couples can legally register their relationships. Registration is not the same as a marriage certificate, but it is a good way to prove the legitimacy of your relationship to employers and insurers, Ms. Hudson said.
PREPARE TO PAY MORE TAXES Unlike married couples, domestic partners must pay federal and sometimes state taxes on health care benefits. That’s because the Internal Revenue Service counts the value of the domestic partner’s benefit as income for the employee. What’s more, pretax dollars from an employee’s flexible spending accounts or health savings accounts cannot be used to cover the domestic partner’s benefits.
Let’s say, hypothetically, that the cost for a partner benefit is $10,000 a year, and the employee is at the 40 percent marginal tax bracket. In addition to the share of premiums the employee pays, he or she would pay about $300 a month in taxes.
“That really adds to the cost of the benefit,” Ms. Hudson said. “It may be why so few couples take advantage of domestic partner benefits when they are available.”
She cited a Williams Institute study that shows unmarried partners are two to three times more likely to be uninsured than married people.
Ms. Hudson says that in rare cases, companies have been willing to increase employees’ paychecks to make up for the extra tax burden. So be sure to ask your human resources department about this.
A POSSIBLE TAX EXCEPTION For some people, there may be a way around the tax bind.
If your partner lives in your household for the entire tax year, receives 50 percent of his or her support from you and generally meets the criteria laid out in section 152 of the tax code, then you are legally entitled to receive domestic partnership health benefits tax-free. A lawyer or accountant well versed in domestic partnership law can help determine if you’re eligible for this break.
“This break is confusing and misunderstood because it is a special exemption for health care benefits only,” said Ms. de Veer. “Employers don’t always understand this part of the code themselves, so they often fail to tell employees about it. Lots of couples are paying taxes on health benefits that don’t have to.”
To determine if your partner receives 50 percent support from you, fill out the worksheet on page 33 of I.R.S. Publication 17, at www.irs.gov/pub/irs-pdf/p17.pdf
COVERAGE FOR CHILDREN Most employers that cover domestic partners also cover the children of that partner, considering it a parental relationship on the employee’s part, even if it has not been formalized legally.
With individual policies, though, depending on the insurer, you may have to prove you are a legal custodian of your partner’s child, said Ms. Hudson.
“Filing for custody rights is probably something you should do anyway,” advises Ms. Hudson. “You’ll need that document for everything from signing school permission slips to getting health benefits.”
WHAT ABOUT COBRA? If you are covered under your partner’s employer-sponsored insurance, and your partner is then laid off, many firms will offer you the opportunity to buy the same health care coverage for up to 18 months under the federal law known as Cobra. If the relationship ends, you may also be able to elect Cobra coverage, just as you would if you were divorcing.
Because Cobra is a federal law, employers are not obligated to offer this coverage to unmarried partners, but many do, says Ms. de Veer. As with all Cobra coverage, you must be sure to make the election within 60 days of the last day of coverage under the employer’s plan.
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