Insurance benefits: How to change the culture

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It’s easy for businesses to offer domestic partner insurance benefits, as long as they follow a few legal — and cultural — steps.

Most insurance companies, for example, offer domestic partner benefits. Kaiser Permanente was one of more than 300 companies to be recognized by the Human Rights Campaign for its equality efforts.

Communication is the key to a smooth transition, said Jude Biggs, a labor and employment attorney with Holland & Hart.

“For some companies, it’s a huge cultural change,” she said. “So it’s important to spend the time to discuss it. To frame it as a benefit for equals, even though the law doesn’t require it. Some companies do run into bias, so it’s critical that it’s clear that the decision comes from the top, not from employees.”

Even the simple act of providing domestic partner coverage can be “touchy,” she said.

“Companies should promote it as part of their values,” Biggs said. “Doing that is as important as making sure the technical part is covered.”

Companies that offer domestic partner benefits are generally seen as more generous than companies that do not, she said. Taking advantage of that perception can benefit businesses that want to hire from a large pool of applicants.

But following the appropriate IRS regulations can be tricky, said Rebecca Hudson, employment benefits attorney at Holland & Hart.

“The partner’s share is taken out after taxes, not before,” she said. “That’s different — and not doing it that way can cause a big mess with the IRS. I have a client now that has to re-issue W-2s and change withdrawal for things like FICA over a period of several years.”

Money set aside for medical expenses in flexible spending accounts are also treated differently by the IRS. That money is tax-deductible for married couples, but not for same-gender couples, Hudson said.

Proper documentation of the relationship is also vital, Biggs said. Holland & Hart recommends that businesses ask for proof of the relationship. Usually domestic partners must live together for a year and sign an affidavit that they are in a committed relationship.

“We advise our clients to get proof of joint residency,” Hudson said, “the same things we do for common-law marriages to make sure the spouse is covered in those cases. They just need to make sure there is an intent to live together and be committed to each other.”