Although health benefits for employees’ domestic partners are becoming more common, many small to mid-sized employers have had trouble finding an insurance company willing to provide the coverage. Several new developments, though, may make it easier for you to extend these benefits to your workers. But there could also be a serious downside for employees who elect domestic partner benefits, and you may want to warn them before they sign up.
More Insurers Offering Benefits; New Legislation
For years, health insurers were reluctant to cover domestic partners for fear of an increase in expensive claims such as those related to AIDS. But, recent studies show that insurers’ claims costs have been no higher for domestic partners than they are for traditional spousal and dependent coverage.
As a result, several of California’s largest health plans-including Blue Cross, Blue Shield, Health Net, PacifiCare and Kaiser-have begun selling domestic partner coverage to most employers, regardless of their size, usually at no added cost. However, the state-sponsored Health Insurance Plan of California, a health insurance purchasing pool for smaller employers, is not yet offering such benefits.
These programs may be even easier to get in the near future thanks to a bill pending in Sacramento that would require insurers and HMOs to offer insurance for domestic partners to all employee groups they cover just as they do for spouses and dependents.
All these developments should be welcome news if you are looking for a way to enhance your benefits package at little or no cost, or if you are subject to the controversial San Francisco ordinance requiring firms doing business with the city to offer domestic partner coverage.
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Employee Palimony Alert
The increased availability of this coverage will certainly lead more domestic partners to sign up for the benefits. But before they do, you may want to warn them that there could be serious legal and financial ramifications down the road.
Many insurers require the employee and partner to sign a declaration stating they are domestic partners and they have agreed to be jointly respon- sible for each other’s basic living expenses or welfare. This language is similar to the statements couples registering as domestic partners in San Francisco, Santa Monica and a few other cities are asked to sign. And the new legislation, if passed, would also require partners to confirm their mutual responsibility for each other’s living expenses in order to obtain health benefits.
The catch is that if the relationship sours, one partner could later sue the other claiming they’re entitled to financial support or “palimony.” The insurance carrier’s form could be used to prove the couple had an agreement to share expenses or provide support to each other. And generally agreements such as these between nonmarital partners, gay or straight, can be enforced in court.
Warn Employees
If your insurer insists on this type of declaration, you may want to alert employees about the possible risks of signing it. Here is some sample language you can use:
This form could have legal implications under California law beyond receiving employee benefits. For example, the law permits unmarried cohabiting partners to privately contract regarding the financial obligations of their relationship. This form could be used as evidence of such an agreement. You should consult an attorney if you have questions regarding the potential legal effects of signing this form.
It’s important to note that this is a cutting-edge issue. No court has yet said you must inform employees of this potential risk, or that you could be liable if you don’t. But to avoid future problems, it’s a good idea to suggest that employees consult an attorney before signing.