Insurance unclear in civil unions

Insurance unclear in civil unions


Not all couples will be able to share coverage

By ANNMARIE TIMMINS Monitor staff
December 23. 2007 12:02AM
After Jan. 1, state workers and many others who celebrate a civil union will be able to add their same-sex partners to their health care plans. Albeit with a tax consequence.
But some, perhaps many, gay and lesbian workers won't have the same opportunity.
That's because employers who self-insure their workers - as opposed to buying a health care plan through an insurance company - will have discretion to extend or deny benefits to their employees' gay partners. And the self-insured population is not a small one in New Hampshire, according to the state insurance department: It's estimated at 46 percent of the insured population.
Wal-Mart, the world's biggest retailer, for example, is self-insured. So is Target. Wal-Mart does not extend benefits to same sex partners. Target, meanwhile, does. Neither company returned calls seeking how they'll respond to the new civil union law after Jan. 1.
"What we've said . . . is that assumptions about equal access to spousal benefits is dangerous," said Michele Granda, an attorney with GLAD, Gay and Lesbian Advocates and Defenders, in Boston. The group has hosted four workshops in New Hampshire for people considering entering a civil union.
This summer, New Hampshire became the fourth state in the country to allow same-sex couples to legally unite in a civil union. The others are Vermont, Connecticut and New Jersey. Massachusetts is the only state that allows gay marriage.
At GLAD's workshops, Granda has warned couples to consider the serious limits, even repercussions, at the workplace and beyond as they consider pursuing a civil union. She urges couples to seek the help of authorities such as their company's human resource director, a lawyer or tax expert.
For example, couples who may want to adopt internationally may want to forgo a civil union that will out them as gay because some countries won't allow gay and lesbian couples to adopt. For similar reasons, a civil union is dangerous for a couple if one partner is in the military and serves under "Don't Ask, Don't Tell."
But questions over health benefits are some of the most frequent, Granda said.
The first challenge is determining what benefits are available under an employer's health care plan.
• State, county and municipality workers will all be able to extend coverage to their gay and lesbian partners - with a caveat. State workers will have to obtain a civil union first. Next year, the domestic partner benefits currently available to same-sex couples will be discontinued, and only couples who get a civil union can obtain joint coverage under a single plan.
Sara Willingham, of the state personnel division, said about 40 couples currently use the state's domestic partner benefit.
• Anyone who is self-employed and purchases insurance will also be able to purchase coverage for a partner.
• Federal workers will not be able to share coverage with a gay or lesbian partner because federal law does not recognize same-sex unions.
• Private-sector employees who get coverage under an insurance plan regulated by the state will be allowed to extend coverage to a same-sex partner. If your company, for example, uses Anthem as an insurance provider, you will be able to cover your partner.
• The situation is different for private sector employees who work for a company that offers insurance itself rather than buying it through a plan. Those companies that self-insure can decide whether to extend the benefit to partners.
Here's why: Self-insured plans are not regulated by state law, and the federal law that controls them does not dictate who can be a beneficiary. That leaves the company to decide.
Sometimes, employers don't understand the new law's implications on benefits.
"If they understand they have the discretion to do the right thing," Granda said, "they often will."
This happened last week at Rymes Propane and Oil, a self-insured company with offices in Concord and beyond. Dan Bilodeau, a driver for the company who lives in Concord, asked if he'd be able to add his partner, Gary Benson, to his insurance plan after they celebrated their civil union Jan. 1.
Bilodeau said his human resource director was initially unaware about the specifics of the new law and was unable to give him a clear answer. Bilodeau pursued the matter and learned late last week the company would allow him to add Benson to his plan.
"I am just so excited," Bilodeau said. He said the decision left him feeling valued and equal to everyone else at the company.
The company's human resources director could not be reached last week.
But Granda suspects there are also some employers who purposely misrepresent the discretion options under self-insured plans.
"I think many employers who don't support their gay employees use federal law as an excuse," said Granda. They tell their employees the can't extend benefits, when the truth is, they aren't required to but can.
Granda and others describe this aspect of the law as evolving and confusing. Patricia McGrath, an attorney with Devine, Millimet and Branch in Manchester, advises employers on a variety of matters. When it comes to the civil union law and benefits, her advice is to offer gay and lesbian couples the same benefits extended to married couples.
Regardless of what the insurance laws allow, she believes employers could face a discrimination lawsuit if they treat same-sex and married couples differently when it comes to health benefits.
"I ask them, 'Do you want to be the first to test it'?" McGrath said. In the end, the cost of providing health care to a partner will likely be less than the cost of defending a lawsuit. Plus, there is goodwill and good morale to be gained, she said.
But it's not all good news when employees are able to add same-sex partners to their health care plan. There is a tax consequence and it can be prohibitive, said Willingham from the state personnel division.
Federal law allows employers to grant health care to a worker's married spouse without an additional tax. But when a person adds a same-sex partner to his health care plan, the value of that plan must show up in the employee's paycheck. And he must pay federal tax on that value.
So if an employee adds a partner to her plan and value of that coverage is $6,000 a year, her salary will be taxed as though she got a raise of $6,000.
Same-sex couples who each have coverage under their individual plans may want to maintain those plans to avoid additional taxes. But it's a tax worth paying for someone like Bilodeau, he said, because his partner does not currently have health coverage.
It's distinctions like these that lead many to argue that civil unions do not go far enough in giving gay and lesbian couples equal rights. "Employers may think fair is fair, but it's not yet fair," Granda said.