Domestic Partner Benefits

The term “domestic partner benefits” refers to employee benefit plans that offer to non-married couples the same or similar benefits as those provided to married couples. More and more employers, in both the public and private sectors, are offering benefit plans that provide coverage to the unmarried partners of employees. Some cities and states require such coverage as a condition of obtaining government contracts. Although domestic partner benefits are increasingly popular, the rules that govern those benefit plans are not uniform. In some states, insurance companies may be prohibited from marketing benefit plans that cover domestic partners. An experienced employment law attorney can advise you on the rules that govern domestic partner benefits in your jurisdiction.

Who is a “Domestic Partner?”

A domestic partnership is usually understood to mean two unrelated, unmarried adults who share the same household. In order to qualify for domestic partner benefits, each employer who offers such benefits has criteria that must be met.

The definition used in many domestic partner benefit plans defines an eligible partner as:

  • at least eighteen years old;
  • not related more closely than would be allowed for a legal marriage under state law;
  • sharing a “committed relationship”;
  • in an exclusive relationship with his or her partner; and
  • financially interdependent with his or her partner
  • Some domestic partner benefit plans limit participation to same- partners.

Participation in domestic-partner benefit plans is often limited to those in a relationship that is considered committed. The term committed is defined in many different ways. Some states and cities allow domestic partners to register their partnership. This registration, while not carrying the same legal status as marriage, is sometimes made a condition of participation in a benefit plan. Other plans require a waiting period of six months to one year before a partner will be eligible to enroll.

Benefits Covered

Many domestic-partner benefit plans offer only minimal, low-cost benefits. Examples of these benefits include sick leave, relocation expenses, access to company property, and permission to attend company functions.

The benefit of greater importance to most employees is health and medical insurance. Many employers hesitate to extend such benefits to domestic partners unless they are required to do so for fear that the cost will be too high. Studies have shown, however, that the increased cost of adding domestic partner coverage to a health insurance plan is less than many employers may expect. Participation in domestic partner benefit pans tends to be low, and those employees who do participate tend to be younger and healthier. Furthermore, there is less risk that a plan will have to cover the high costs of pregnancy and childbirth for domestic partners.

Tax Consequences

Federal income tax laws do not treat domestic partner benefits the same as benefits offered to married couples. Ordinarily, an employee whose partner receives domestic partner benefits must include the cost of those benefits as taxable income. This means that the employee must pay tax not only on the premium paid for the benefits, but must include the portion of the cost of the benefits paid by the employer as taxable income. The exception is for partners who are legal dependents, as defined by the Internal Revenue Code. In order to be a legal dependent, a partner must live in the same household as the employee and must receive over half of his or her support from the employee.

Conclusion

Thousands of employers now offer domestic partner benefits. Some offer the benefits out of fairness to all employees, while other employers see it as a way to attract and retain top quality employees. As such benefit plans become more popular, the rules and regulations that relate to domestic partner benefits will continue to change and evolve. A knowledgeable employment law attorney will be able to give you current advice on the rules that govern domestic partner benefit plans.

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