Optimizing Business Value: Benefits of Domestic Partner Programs

The advantages gained by providing benefits to domestic partners can outweigh the costs. This report will define domestic partnerships, outline the various benefits available for dependants, provide analysis related to the cost of providing benefits to dependants of domestic partnerships, discuss various benefit package options and related costs, and provide details related to the value the company stands to gain by offering such benefits.

Domestic Partnership

Domestic partnerships are generally thought of as a relationship between two members of the same sex.

While same sex relationships garner most of the attention, domestic partnerships are not always between members of the same sex. California Family Code Section 297 defines domestic partners as “two adults who have chosen to share one another’s lives in an intimate and committed relationship of mutual caring. To establish a domestic partnership in California, a couple must file a Declaration of Domestic Partnership with the Secretary of the State, share a common residence, not be married or in a domestic partnership with someone else, not be related by blood, both are over the age of 18, both are the same sex, or opposite sex over the age of 62 and meet the eligibility criteria under the Social Security Act.

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Legal Issues Currently, 18 states offer domestic partner benefits for same-sex partners of state employees.

Several state and local governments that offer health insurance and other benefits to employees’ unmarried domestic partners are currently facing lawsuits. Proponents of the Defense of Marriage Acts (DOMA) claim these constitutional amendments prohibit governments from offering such benefits to any dependent of a relationship that does not fit the state’s constitutional definition of marriage.

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Both gay-rights advocates and the American Civil Liberties Union dispute such amendments and are currently engaging DOMA proponents in courts across America in attempts to resolve their differences (Gentile, 2006).

The costs associated with defending such legal matters can prove to be very cumbersome. Types of Employer Benefits When seeking employment, benefit packages play a major role in attracting and keeping employees. Employer benefits consist of more than the basic medical, dental, and vision plans. A variety of additional benefits being sought after by potential employees include, but are not limited to, retirement plans, life insurance and the family medical leave act. To qualify for domestic partner benefits, employees may be asked to sign a statement or submit an affidavit asserting they live with a domestic partner and are financially interdependent” (Greenwald, 2003). Health Insurance “For most nonelderly people in the United States, health insurance and access to health care derive from one’s own or a family member’s employment” (Ash and Badgett, 2006). In all fairness, these types of benefits should be offered to these types of families under the current guidelines of Domestic Partnership.

Two levels of benefits are offered by employers, single coverage and family coverage. Single employees are at a disadvantage when it comes to compensation because some employers offer their employees a flexible benefit to assist with costs. These benefits will include all the same privileges that legally recognized families are currently receiving. The entitlement shall consist of doctor’s visits, prescription drug coverage, hospitalization, and eye exams (Briggs, 1994). Dental Benefits Dental care is an essential benefit which should be available to all family members. Preventive dental care could significantly reduce loss of productivity and catch problems before they become chronic or severe” (Gustin, 2003). Dental benefits are very affordable and valuable. One available option is for this company to offer dental as a voluntary option. This would enable the employees and their domestic partner to take advantage of the dental plan at a group rate, but the employee would be responsible for the cost (Gustin, 2003). Retirement/401K Retirement Plans and 401K’s are benefits that are only available to employees; however, choosing beneficiaries is a very important detail to these plans. Although domestic partners cannot be given all of the rights of spouses, plans can be structured to provide them with many of the benefits available for spouses” (Davis, 2007). In addition to being named as beneficiary, a hardship withdrawal can be taken based on the need of the domestic partner, and domestic partners will have the right to rollover death benefits (Davis, 2007). Life Insurance Employee life insurance is available at a more affordable rate through employer plans. Adding family members is an optional benefit.

Under this plan, domestic partners and children would be entitled to life insurance coverage for just pennies a day. This would incur no expense for the employer and the employee would benefit from a group rate. Cost to Employees and Employers The cost of healthcare is on the rise and no end to this crisis is in sight. Most people believe all employers should offer health insurance to its employees; however, with the cost of healthcare so high companies who offer these benefits are trying to find ways to offset costs. If all employers did offer health, dental, and life insurance, who would cover the cost?

A survey administered by the Commonwealth Fund titled The Public’s Views on Healthcare Reform in the 2008 Presidential Election asked that question to 3,500 randomly selected adults. 70% of people surveyed thought the cost should be shared equally between the employer, employees, and the government. 80% of the people surveyed also thought that if an employer did not offer health insurance they should contribute to the cost of coverage (Lubell, 2008). Tax Equity The Tax Equity for Domestic Partner and Health Plan Beneficiaries Act of 2007 was introduced March 29, 2007.

The act states employers offering healthcare insurance have to provide healthcare coverage to domestic partners, same-sex or opposite sex. This law has been added to stop federal tax inequalities same-sex couples currently face when receiving healthcare benefits offered by their employers (Postal, 2007). The new law significantly affected employers in the Northeast and Western states because 42% of larger companies in the Northeast, and 38% of companies in the West have same-sex domestic partner healthcare coverage. Only 14% of large companies in the Midwest and 10% of companies in the south have this type of coverage (Cohen, 2004).

Dual Coverage Because the cost of healthcare has increased 15% since 2003, some states in the U. S. have prohibited employees from claiming their spouses/domestic partners as dependents; thus, prohibiting dual coverage in the workforce. Banning dual coverage for these employees saves the state tax payers several million dollars per year while the employees and their families have suitable health insurance coverage. Employees rely on dual health insurance coverage to cover out of pocket costs resulting from procedures which are not fully covered by their primary carrier.

Dual coverage insurance can save families hundreds, if not thousands of dollars per year, but can potentially cost the employer hundreds or thousands more (Employer-Sponsored, 2004). Annual Cost According to a research study performed by The Henry J. Kaiser Family Foundation and Health Research and Education Trust in 2006, private employers nationwide spend an average of $4,242 for single coverage and $11,480 for family coverage on employer sponsored health insurance coverage annually (Employer Health, 2006).

Whether the employee is a single hetero-sexual or homo-sexual the rate for single coverage remains the same. The same for family coverage, the married hetero-sexual couple and the same-sex or opposite-sex domestic partners family coverage cost also remains the same. Employees are paying an average of $1,860 for single coverage and $4,848 for family coverage annually. These costs are causing employers to raise workers’ insurance premiums or reduce coverage. Some companies perform internal audits to eliminate ineligible dependents, older children, and ex-spouses/ex-domestic partners.

If an employer finds dependents on an employees’ insurance that should not have been covered, the employee is required to pay back medical bills and insurance premiums through payroll deductions (Employer-Sponsored, 2004). Using information from these internal audits employers may notice a slight domestic partner enrollment increase: 0. 1%-0. 3% for gay and lesbian partners and 1. 3%-1. 8% for heterosexual partners. The increase in enrollment does not significantly affect the annual cost to the employer for employer-sponsored benefits provided to domestic partners and their families (Ash and Badgett, 2006).

Benefits to the Company Healthcare continues to be a concern to both employees and employers. Employers are developing and offering programs and incentives to attract various types of workers, including those in domestic partner relationships, to attract more qualified candidates. Making benefits available to an employee’s domestic partner, a company is likely to hire and retain an employee whose work output is optimal. Employees in a domestic partner relationship appreciate their employer considering their particular need which results in a higher production rate. Davis 2007). Increased Productivity An employee who is healthy and has a healthy family is less likely to call in sick and take unnecessary time off to care for his or her family. In a study conducted by Ipsos-Reid (2004), two main contributors to employee absenteeism are depression and stress. Health benefits made available to an employee and his or her domestic partner can help reduce these factors. Mark Cauthen, benefit manager for the city of Colorado Springs, believes if one’s dependents feel better, the employee is more productive and focused at work (Wojcik, 2007).

Preventative Measures Many companies have recognized the importance of helping employees manage their work and personal lives. Some of the more common preventive measure benefits currently being offered to employees, their domestic partners, and other immediate family members residing in the home are: wellness, flu shots, and fitness programs. Offering these various programs help the employee feel the employer cares for the health of his or her family resulting in increased productivity (Meghji 2007). Lower attrition rates

An employer must also be concerned with the effect of employee retention. Currently 50% of Fortune 500 companies are providing benefits to employees involved in same sex domestic partnerships and heterosexual partnerships. Conclusion Offering benefits to domestic partners makes good business sense. While providing benefits to domestic partners may slightly increase employer cost, the benefits will prove profitable. As the research has indicated, enrollment will increase slightly which will not pose a financial hardship to any corporation.

Updated: Oct 10, 2024
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Optimizing Business Value: Benefits of Domestic Partner Programs. (2018, Sep 22). Retrieved from https://studymoose.com/domestic-partnership-essay

Optimizing Business Value: Benefits of Domestic Partner Programs essay
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