As the Supreme Courts recent ruling in favor of gay marriage in Obergefell v. Hodges changed the landscape of employee benefits across the country, the question of how the courts decision would affect domestic partner coverage moved center stage.
Because of the patchwork of laws throughout the country, many employers took to offering domestic partner coverage in states where same-sex marriage was illegal, but more often than not, domestic partner coverage was also extended to opposite-sex domestic partners, according to consulting firm Mercer.
Domestic partner coverage has been growing steadily, Mercer noted in a recent national survey of employer-sponsored health plans. In fact, in the past five years, offerings of domestic partner coverage have risen from 39% to 55% among larger employers.
Mercer also noted geographical variations in the numbers of employers offering health care benefits to domestic partners. The South and Midwest regions of the U.S. had fewer employers offering coverage to domestic partners (46% and 45% respectively) while the Northeast (60%) and West (78%) saw more solid majorities.
Following the Supreme Courts decision on marriage equality in June, some industry experts questioned whether employers would stop offering benefits to employees domestic partners.
With no legal barriers to same-sex marriage, its likely that many employers will eliminate their benefits for unmarried partners, which are complex administratively due to tax and other reasons, predicted Todd Solomon, a Chicago-based partner with McDermott Will & Emery.
According to the Mercer survey, 19% of employers offer domestic partner benefits to same-sex couples, 55% offer them to both same- and opposite-sex couples and 25% dont offer them all.
Eight percent of employers that currently offer domestic partner coverage to both same-sex and opposite-sex couples, said they had already dropped domestic partner coverage in states with legalized same-sex marriage. Another 8% say they will drop it for the next open enrollment and 26% are considering dropping it within two to three years. The rest (62%) say they are not considering it.
Among those employers that currently offer domestic partner benefits to same-sex couples only, 44% say theyre not considering dropping their domestic partner coverage, while 23% say theyre considering dropping it within the next two to three years.
The decision to drop domestic partner coverage would certainly eliminate the administrative problems that come with offering it, says Tracy Watts, Mercers health care reform leader.
When an employer drops domestic partner coverage, couples will essentially be required to marry or lose coverage, she says. For the couples who prefer not to marry same-sex or opposite-sex a change in policy could have a far-reaching impact. So employers need to weigh attraction and retention needs, as well as organizational culture, in the decision [to drop coverage].
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