Yesterday we saw how same sex marriage and benefits are a complicated mix. Today we’ll examine similar issues concerning transgender benefits and unmarried partner benefits.
Although not related to same-sex marriage, transgender benefits issues have come to the forefront. Offering benefits for transgender employees is a relatively new frontier, Solomon says, but more and more employers are adding or considering this benefit.
He points to the Human Rights Campaign Foundation’s 2012 Corporate Equality Index, which requires health coverage to include transgender-specific treatments (mitigating “medically necessary” and “cosmetic” exclusions) in order for the employer to receive a 100% rating.
Although progressive employers are looking at or already offering transgender benefits, Solomon concedes that it can be difficult to work with insurers/providers to add this benefit. In addition, offering such benefits involves some complicated considerations, for example, whether to cover “medically necessary” cosmetic procedures.
The issue of the taxation of transgender benefits can also present challenges. Taxation of medical care related to treatment of gender identity disorder (GID) is confusing since many of the treatments are cosmetic in nature. Since expenses related to cosmetic surgery are generally extended favorable tax treatment only if the procedures are medically necessary to treat a physical deformity existing at birth or arising by accident or disease, this presents an issue.
Solomon points to a 2010 decision by the U.S. Tax Court which held that hormone therapy and gender reassignment surgery were deductible medical expenses because they are “well-recognized and accepted treatments for severe GID.”
However, the court held that breast augmentation surgery was not deductible because there was insufficient evidence that surgery was medically necessary for individuals involved in the case. Solomon warns that this particular ruling was based on specific facts and circumstances involved and leaves open the possibility that breast augmentation could be medically necessary for another individual with GID. (O’Donnabhain, 134 TC no. 4)
Unmarried Partner Benefits—The Future?
Finally, Solomon addressed the issue of unmarried partner benefits and whether the legalization of same-sex marriage will result in the elimination of unmarried partner benefits. Whether employers will continue to provide benefits to same-sex unmarried partners and opposite-sex unmarried partners remains to be seen.
According to Solomon, it is unknown whether employers will require employees to marry in order for the employee’s partner to be eligible for benefits coverage or perhaps whether there be a grace period or other form of grandfathering benefits for couples.
One thing Solomon sees is that employers are changing policies to require equal proof of all employee marriages (e.g., sex of spouse/state of marriage/licenses). The trend, he says, is to require less proof of domestic partnerships by eliminating requirements such as cohabitation, minimum duration, and financial interdependence.