Fewer employers offering domestic partner benefits

In 2015, the United States Supreme Court held that the Fourteenth Amendment requires states to license marriages between same-sex couples. Since that ruling, many employers have stopped offering health coverage to employees’ domestic partners or civil union partners due to the difficulty in administering the benefit.

A civil union is generally a state-recognized relationship between same-sex couples, while a domestic partnership may include same-sex or opposite-sex couples. For example, if a couple got engaged to be married and lived together, the couple may qualify as domestic partners.

When same-sex marriage was not an option, many couples registered as civil union partners or domestic partners.

A survey by the International Foundation of Employee Benefit Plans (IFEBP) found that in 2014 (the year before the Supreme Court’s ruling in Obergefell v. Hodges), 51 percent of employers provided benefits to samesex partners in civil unions, and 59 percent provided benefits to same-sex domestic partners.

In 2016, one year after the Supreme Court’s decision, only 31 percent of employers offered benefits to same-sex partners in civil unions, and 48 percent offered benefits to same-sex domestic partners.

Benefit challenges

Before the Supreme Court’s decision, many states did not license marriages between samesex couples, although a number of states did (and still do) provide for registered domestic partnerships or civil unions. Registered couples are often treated similarly as married couples for state tax purposes. These partnerships or unions are not, however, recognized under federal tax laws.

Sorting out the tax issues for health insurance premiums could, therefore, result in some headaches. Both the employer and employee share of premiums for an employee’s own coverage are exempt from federal taxes. However, the portion of the premiums to cover a domestic partner or civil union partner is subject to federal income tax.

Employers that offered such coverage also faced the challenge of verifying domestic part-

ner relationships, particularly in states that do not provide for registered partnerships. Employers would typically adopt criteria for couples such as:

Both must be at least 18 years of age.

Neither is married or in a domestic partnership

with anyone else.

The individuals are not related to each other.

The couple have shared a residence for at least six months.

Employers could choose to apply other requirements, but obtaining information to verify a domestic partner relationship could be challenging.

Just married

When same-sex marriage

was not an option, employers may have been more willing to put in the effort to offer coverage for domestic partners. Now, any couple may get married, and health plans that cover spouses must also cover same-sex spouses. Not surprisingly, fewer employers are now offering coverage for domestic partners.

This does not mean that benefits for domestic partners

have gone away completely. The IFEBP survey found that smaller employers were more likely to drop domestic partner coverage, while more than three-fourths (77 percent) of organizations with 10,000 or more employees still offer benefits to domestic partners.

Partner benefits

Despite the challenges, many larger employers

still find domestic partner benefits to be worthwhile. As noted, domestic partners may be the same or opposite sex, and some employers may be choosing to cover opposite-sex partners as well.