Roughly one-third of U.S. employers offer currently domestic partner benefits, whether for opposite-sex partners, same-sex partners or both.
Regardless of your company’s policies – or your personal beliefs – it’s important to know how these benefits (or the lack thereof) are affected by federal and state regs.
Here’s a rundown of how COBRA, flexible spending accounts, HIPAA, FMLA and tax regulations affect these benefits:
Currently, there’s no federal requirement for employers to offer COBRA to an employee’s domestic partner who loses coverage due to what would otherwise be a qualifying event. However, many employers choose to do so, anyway.
Be careful if you choose not to offer COBRA to domestic partners. You’re not necessarily in the clear legally. State insurance laws often vary from their federal equivalents.
Flexible spending accounts
In most cases, an employee’s flexible spending account (FSA) money may not be used to reimburse health care for a same-sex domestic partner, even if you do provide other domestic partner health benefits.
Reason: The IRS has ruled employer-sponsored health benefits are exempt from taxable income only if domestic partners (same or opposite sex) are legally considered spouses or dependents under state law.
Fifteen U.S. states plus the District of Columbia give tax-favored status to opposite-sex common-law marriages. Sixteen states that lack common law marriage statutes will grant tax-favored status to couples who register as common-law partners in other states.
The tax on healthcare expenses for partners that can’t get tax-favored status in your state is determined by your average local market cost for a domestic partner’s health coverage.
One case where FSAs might be used for same-sex partners: The partner meets criteria under the Working Families Tax Relief Act (WFTRA). Under WFTRA, the partner must live with the employee for more than half the year and receives more than half his or her support from the employee.
Domestic partner benefits are something of an anomaly under federal HIPAA regulations. In the first place, HIPAA protects the portability of employee health coverage. But domestic partner benefits aren’t necessarily portable if an employee changes jobs. It all depends on whether the new employer offers such coverage, and on state insurance laws.
On the flip side, if your organization’s health plan (like most) is covered under HIPAA, the act’s non-discrimination rules apply to domestic partners to the same extent that a spouse or dependent covered under your plans would be.
Example: If you offer domestic partner health benefits and have a wellness program in which an incentive for undergoing a health risk assessment is available to employee’s spouses, you can’t exclude the domestic partner from receiving the incentive.
As for HIPAA’s privacy rules for protected health information, it works the same for domestic partners as for anyone else covered on your health plan.
Family leave under federal FMLA only may be taken to care for a spouse, child or parent with a serious health condition.
The regulations define spouse as “a husband or wife as defined or recognized under State law for purposes of marriage in the State where the employee resides, including common law marriage in States where it is recognized.”
In other words, an employee’s right to take family leave depends entirely on whether the relationship holds the legal status of a common law marriage (for opposite sex partners), civil union (for same sex partners) or same-sex marrage (in Massachusetts).
Unlike typical benefits for spouses and dependents, domestic partner benefits are subject to both federal and state tax as a form of compensation, according to the Partners Task Force for Gay and Lesbian Couples.
In terms of administration, however, benefits such as paid bereavement leave tend to work the same in terms of their tax treatment.
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