February 2, 2005

Survey: more U.S. firms offering domestic partner benefits

A story released today by Reuters reports that more U.S. companies have started to offer benefit coverage for same-sex couples and other "nontraditional" families, according to a new survey.

The Nontraditional Family Benefit Coverage Survey, conducted by Mellon Financial Corp. <MEL.N> Human Resources & Investor Solutions business, found that 31 percent of responding companies offer domestic partner benefit coverage, up from 19 percent in a 2001 survey.

Of those offering domestic partner coverage, 60 percent have offered it for less than five years.

"The larger the company is, the more likely they are to provide coverage for domestic partners who are same-sex or opposite sex," said Rich Stover, a principal with Mellon who worked on the survey.

Offering the coverage is not a financial burden on most companies.

While there is a high level of employee interest in such benefits for same-sex couples, there is not a high level of use of the benefits, according to the survey results.

"A domestic partner is probably more likely than a traditional spouse to have a job, to have coverage at that job and not necessarily need it," Stover said.

Also, employees may seek out the coverage, but once they discover that the full value of that coverage is taxable income to them, they may decide not to take the coverage should the domestic partner have other coverage available.

"The general sense is that adding domestic partners doesn't cost any more; it probably costs a little bit less than adding a traditional spouse might cost" because partners are less likely to be listed as dependents and generally have fewer children, who would be dependents, Stover said.

While coverage of domestic partners does not typically cost employers more than covering traditional married couples, some employers may need to revisit the way they approach taxes on such benefits, since Massachusetts now allows same-sex marriage.

Twenty-eight percent of survey respondents said they have received questions from employees about benefits for same-sex spouses, but 82 percent of organizations do not have a plan in place to deal with benefits for employees with same-sex marriage certificates.

"Typically, the value of the health-care coverage is taxable income to the employee if they have a domestic partner," Stover said. "But if the domestic partner is a dependent of that employee under the tax code ... then the benefit is not taxable."

The survey was completed in the fourth quarter of 2004. More than 550 U.S. employers with an average of more than 5,000 employees each responded.

The study defined "domestic partners" as opposite-sex or same-sex unmarried partners. In the survey, 66 percent of employees who use domestic partner benefits use them for same-sex partners.

Most companies offering coverage to domestic partners require employees to be in an established relationship to qualify, the survey noted. Eighty-eight percent of those who responded require proof, while 73 percent ask that a partnership exist for a minimum period.