Same But Not Simple: Preparing for Same-Sex Benefits Administration
As the contingent commission drama plays itself out, many benefits brokers are also addressing more immediate concerns, such as the trend toward offering same-sex benefits.
While forward-thinking programs are vital to recruit and retain the best talent in a competitive workforce, same-sex/domestic-partnership benefits administration is a complicated regulatory process involving continuous judicial changes.
A close watch on changing compliance will provide you with a better understanding of the federal and state laws that govern employee health-care benefits, paid-leave, pensions and COBRA benefits in order to manage risk. Like all employee programs, if mishandled, companies risk a public relations fiasco or possible litigation for discrimination.
Because the federal Defense of Marriage Act specifically defines marriage as a union between a man and a woman for purposes of federally administered benefits, all employers need to be mindful of the following: First, for purposes of Social Security and other federal benefits, same-sex spouses or partners will not have the same rights as spouses whose marriages are recognized under federal law.
In addition, premiums paid for employee benefits for the same-sex spouse will not be eligible to be paid on a pretax basis unless the spouse or partner also qualifies as a dependent as defined in the Internal Revenue Code.
Secondly, many employers made domestic-partner benefits available to employees before there were state laws recognizing these unions. In states where same-sex marriage is recognized or where partners can register with the state under civil-union laws, some employers are eliminating benefits for domestic partners unless the couple is married or has registered a civil union. Employers in states with same-sex marriage or civil-union laws may want to consider this option, which can help minimize concerns about employees obtaining coverage.
A third issue that confronts multistate employers is how to handle issues related to same-sex partners when there are employees in states with different laws. Some states have recognized same-sex marriage or civil unions, and others have passed some version of a defense of marriage law. Depending on the state, employees' relationships will have different legal status.
So what does this mean for your business? Offering same-sex benefits will increase your homework, but it will also increase your talent pool. Follow the guidelines closely to shape your company policies and ensure a competitive program to attract and retain talent.
TIM PADVA is president and co-founder of Edison, N.J.-based CheckpointHR, an administrative service organization.
August 1, 2005
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