How Will the Same Sex Marriage Decision Affect DP Benefits
The recent US Supreme Court decision legalizing same-sex marriage seems likely to affect employer offerings of domestic partner (DP) coverage. Many employers that now offer DP benefits chose to do so because their employees did not have a legal right to marry their same-sex partners and thus could not qualify for dependent coverage. But more often than not, DP benefits are also extended to unmarried opposite-sex domestic partners, so a change in policy could affect those couples as well.
Offerings of DP coverage have been growing steadily. According to Mercer’s National Survey of Employer-Sponsored Health Plans, over the past five years offerings of domestic partner coverage have risen from 39% to 55% among large employers (500 or more employees). Among jumbo employers – those with 20,000 or more employees – 76% offer DP coverage. There is still a wide variation by geographic region, however. Fewer than half of all large employers in the South and Midwest provide DP benefits (46% and 45%, respectively), compared to solid majorities of large employers in the Northeast and West (60% and 78%, respectively).
With the issue of marriage equality decided by the Court, some employers are debating whether to stop offering domestic partner benefits, which would eliminate the administrative burdens associated with the offering. Mercer polled employers about their thinking on this issue during a webcast conducted about a week after the decision was announced. Of about 150 employers responding, 19% offer DP benefits to same-sex couples; 55% offer it to same-sex and opposite-sex couples, and 25% don’t provide it at all. When we asked those currently extending coverage to domestic partners if the decision will cause them to rethink this policy, 4% said they have already dropped DP coverage in states permitting same-sex marriage, and 15% said they will drop it for the next open enrollment period. While another 28% said are at least considering it, the majority – 53% – said they are not considering it.
Those that provide it to same-sex couples only are more likely to drop it – in fact, 8% say they have dropped it in states that had already legalized same-sex marriage. Another 23% say they will drop it for the next open enrollment period, while 23% are at least considering it. The rest (44%) say they are not considering it. Employers that offer DP to both same-sex and opposite-sex partners are moving more slowly. The majority of these employers – 62% – say they are not considering dropping it. Only 8% plan to drop it for the next open enrollment period, and few – just 4% – have already dropped it in states that legalized same-sex marriage. About a fourth says they would consider dropping it within the next 2-3 years.
The recent ruling will require employers to take some immediate steps to ensure compliance. For example, you’ll need to revisit your definition of “spouse” in plan documents to ensure it covers same-sex spouses and your eligibility rules. And if you offer domestic partner coverage, you may also want to take this opportunity to review your objectives for the program and weigh your employees’ needs and preferences. This decision should reflect your organizational culture and attraction/retention strategies. If you decide to drop DP coverage, couples will essentially be required to marry or lose coverage. For the couples who prefer not to marry – same-sex or opposite-sex – a change in policy could have far-reaching impact.
