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Domestic-partner benefits: Don’t fear cost, controversy

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in Hiring,HR Management,Human Resources,Leaders & Managers,Management Training

Issue: More employers are offering domestic-partner benefits to both same-sex and opposite-sex couples.

Benefit/risk: Such benefits can provide a good recruiting tool, but thorny legal and tax issues must be sorted out.

Action: The pros outweigh the cons; encourage your organization to make the leap into domestic-partner benefits.

If your organization's top execs are thinking about extending benefits to employees' domestic partners, voice your support and bring good evidence to the table. The main reasons:

Cost. In the 1980s, U.S. companies feared domestic-partner (DP) benefits would cause health care costs to balloon. That didn't happen. In fact, 85 percent of companies that added DP benefits in the mid-'90s said their health care costs remained about the same, according to a Society for Human Resource Management (SHRM) study.

Recruiting. DP benefits signal your organization's progressive workplace and can act as a big drawing card, especially in certain regions.

Controversy. Both gay-rights and conservative groups protested on this issue, but DP benefits are becoming more common. In fact, 42 percent of Fortune 500 companies now offer DP benefits, up from just a handful a decade ago.

4 policy considerations

1. Decide who is eligible. If you plan to offer DP benefits, start by defining who will be covered. Some organizations extend the benefits to only same-sex couples because they don't have the opportunity to marry. But such a policy could make you vulnerable to complaints of marital-status discrimination.

Your policy must also address whether the children of domestic partners will be eligible for benefits. Most companies, in the spirit of equity, include them.

2. Verify the domestic partnership. Most firms offering domestic-partner benefits also set specific requirements for verifying the partnership, such as proof of cohabitation and length of relationship. You can require a minimum waiting period after a domestic partnership is declared, say three to six months. And require employees to notify the organization when a domestic partnership ends.

3. Determine which benefits are included. Most companies offer the same benefits as they do for spouses. Don't forget your soft benefits.

4. Weigh tax issues. The IRS doesn't recognize domestic-partner relationships. So employer-paid benefits for domestic partners are considered taxable income and will need to be reported on the employee's withholding statement.

You should also verify any potential state taxation issues.

Your policy should also establish criteria for when and how coverage will be terminated if the relationship ends. Although COBRA continuing health coverage rules don't apply to domestic partners, some employers elect to provide such benefits anyway.

For a summary of state laws on DP benefits, plus a listing of large employers that offer such policies, visit www.hrc.org/ worknet and click on "Domestic Partner Benefits."

Free e-visory report:

Domestic Partner Benefits: Sample Policy

Access a free sample policy on domestic-partner benefits at our Extra! Web site, www.hrspecialist.net/extra.

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