Speaking of gays and the workplace, Ben and I just reviewed our insurance benefits offered through his employer. Like many working couples, we had to decide whether we wanted to keep separate health insurance policies or combine coverage under his or my insurance. Thankfully both of our employers allowed joint coverage, as long as we could certify that we were domestic partners.
Although domestic partner benefits mirror those benefits allowed for married spouses, two key differences remind us that the two still aren’t equal.
Qualifying for domestic partnership benefits takes a lot of paperwork
In order to qualify for spousal benefits, you only need provide your marriage certificate to obtain eligibility. However, domestic partners must meet a much higher burden of proof.
When first applying for benefits with Ben’s employer, we had to complete an Affidavit of Domestic Partnership (which included meeting the eligibility for domestic partnership) AND submit certified birth certificates AND copies of our driver’s licenses.
To qualify for a domestic partnership, we had to meet two of four conditions:
- Live together at least 12 months prior to filing the Affidavit of Domestic partnership
- Have common or joint ownership of a residence
- Have at least two of the following arrangements:
- Joint ownership of a motor vehicle
- A joint credit account
- A joint checking account
- A lease for residence identifying both partners as tenants
- Declare your partner as a primary beneficiary in your will
When choosing between providing a marriage certificate or a folder full of IDs, bank statements, leases, and wills, I will take the single piece of paper every time. However, same-sex couples who live in states that don’t recognize their marriage can’t avoid the extra time and effort it will take to prove the validity of their relationship.
This one kills me.
Most employers pay at least half of the insurance costs covered for its employees. This contribution includes both the employee’s insurance and the recognized spouse’s. The employee excludes the value of those contributions from his or her income, and the employer gets to deduct those payments as an expense.
Unfortunately, the non-taxable nature of those benefits does not apply to domestic partners. Federal tax laws, and those of many states, require that the employer count its portion of the contributions for a “non-dependent same-sex spouse” as taxable income to the employee. In other words, if Ben’s employer contributes $2000 towards my health insurance benefits, Ben must include an extra $2000 in his wages.
A report by the Williams Institute & Center for American Progress found that on average employees with partners pay $1,069 more in taxes than a married couple would with the same benefits. That’s $1000 dollars just for not being married, even if barred from doing so.
This rule not only affects employees, but it also affects employers. Because the employee has a higher income, the employer has to pay an increased share of payroll taxes (the employer portion of social security and unemployment taxes based on the employees wages). According to the same study, employers collectively pay $57 million in additional payroll taxes per year because of this unequal tax treatment.
The Windsor decision this summer has given some hope to those couples and employers that face this disparate treatment. Now many more couples can choose to marry and obtain spousal benefits, alleviating some of the hassle and costs associated with domestic partner benefits. And for those couples that were married before and now get their relationship recognized by the federal government can amend their tax return.
A cost benefit analysis
In the end, we still chose Ben’s plan since it provided greater benefits at a cheaper costs, despite the imputed income. However, when I prepare Ben’s income tax return every year, I can’t help but think about the unfairness of him (and really we) paying more in tax than similarly-situated coworkers. For those of you keeping score, the extra costs and hassle of domestic partner benefits puts two more check marks in the “get married” column, if you can.