Domestic Partner Benefits
Case Written by MBA student
11/15/2006
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Domestic Partner Benefits
Introduction
Although the main focus of this case is the decision of whether or not to offer
domestic partner benefits, it is so closely linked to the debate surrounding same-sex
marriage that it would be impossible to discuss one without the other. Gay marriage has
been one of the most highly debated political topics in recent years. In 1997 the Defense
of Marriage Act was approved by Congress and signed into law by Bill Clinton. The
purpose of this law was to define marriage, in the eyes of the federal government, as the
legal union between one man and one woman. Recently, however, several state and local
governments have made the decision to issue marriage certificates to homosexual
couples. These events have done little more than add fuel to an already heated nationwide
debate. An August, 2006 poll conducted by Pew Forum on Religion and Public life found
that 56% of Americans were still opposed to recognizing homosexual marriage. This is in
stark contrast to numerous other industrialized nations who have made strides towards
rather than away from the legal recognition of homosexual marriage (most notably
Scandinavia, the Netherlands, Belgium, France, Canada, Germany, and Hungary).
Despite the fact that the majority of Americans still appose same-sex marriage,
there has been a trend in the corporate world to offer what has been termed domestic
partner benefits. What this means is that the spouses of homosexual employees living
under the same roof are given the same access to employee benefits as heterosexual
married spouses are. As of November 12, 2006, 263 of the Fortune 500 companies were
offering these types of benefits. Among these companies were several based here in
Minnesota such as 3M, Best Buy, Ecolab, General Mills, Land O’Lakes, Medtronic,
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Northwest Airlines, St. Paul Travelers’ Companies, Supervalu, Target, and several others.
These numbers are up significantly from just 25% of Fortune 500 companies offering
domestic partner benefits in 2000. Much like same-sex marriage itself, offering these
types of benefits is not without controversy.
Opponents of Domestic Partner Benefits
In an increasingly dichotomous nation it should come as no surprise that this
debate is routed heavily in familiar partisan politics. The heaviest majority of those
opposed to domestic partner benefits are highly religious, politically conservative, and
from the Southern United States. The Catholic Church is believed to be one of the biggest
players in the fight against recognition of homosexual couples and even the
implementation of domestic partner benefits.
In order to understand more fully the rationale behind the opposition of same-sex
marriage and likewise domestic partner benefits, the religious rationalization behind this
philosophy will be examined further. The Catholic Church has defined marriage as
requiring two components: “Complementarity” and “Procreative.” The Church claims
that homosexuals do not possess full complementarity because of the complimentary
psychological differences between men and women. In a marriage there are certain duties
that each member specializes in because of their god-given ability to do so. They outline
studies showing that the benefits observed in married couples, such as increased health,
have not been observed in homosexual couples. Furthermore, they posit that homosexual
couples are less committed to one another and more likely to commit infidelity, thus
weakening the bond between them and making a meaningful relationship impossible.
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In regards to the procreative aspect of marriage, many gay rights supporters have
argued that if there is no basis for homosexual marriage because of the inability to
procreate, then there is no basis for the elderly or otherwise infertile to marry either. The
Church has responded by stating that it is not the act of procreation itself that defines
procreativity, rather it is the original design of the complimentary procreative parts that
defines this aspect of marriage. Considering that homosexual couples do not have
complementary sex organs, the Church has stated that they do not have the same
meaningful sexual experience and connection that heterosexual couples have. As a result
of this, the Catholic Church as well as numerous other religious organizations have
chosen not to recognize the union of two same-sex partners as marriage.
Furthermore, many Americans and religious organizations feel that by offering
benefits to homosexual couples without marriage we are blurring the legal distinctions
between married and unmarried couples and changing the definition of marriage
altogether. Catholic Answers Inc. had this to say explaining their objection to a blurring
of the definition of marriage:
Marriage is a conduit through which God's grace flows to the couple and their
children.1 The Catholic Church understands marriage between a baptized man
and woman to be a sacrament, a visible sign of the grace that God gives them to
help them live their lives here and now so as to be able to join him in eternity.2
For Catholics, marriage is social as well as religious, but its religious aspects
are very important. The Bible repeatedly compares the relationship between
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man and wife to that between God and Israel (cf. Hos. 9:1) or between Christ
and his Church (cf. Eph. 5:21-32). For Catholics, marriage is a holy vocation.
They go on to say that “…marriage is basic to the health of society and therefore a public
institution that must be defended against harm.” By blurring the definition of marriage in
a legal sense many have perceived a threat to sacred institution of marriage and have
been compelled to defend against these changes.
Despite how it often times appears on the surface, opponents of offering domestic
partner benefits to employees do not base their logic solely on religious arguments. There
is currently a heated debate regarding the financial impact of offering such benefits as
well. Parties on both sides agree that due to the fact that these benefits are relatively new
it is difficult to predict exactly how much they actually cost to implement.
A major argument against offering these types of benefits stems from the potential
increase in healthcare costs. At a time when healthcare costs are already creating major
headaches for U.S. businesses, the thought of adding to the already growing problem is
one that most executives would rather not have to deal with. Weinberg (2002) found that
the “loss-ratio” (healthcare costs as a percent of premiums paid) was 17.1% higher for
same-sex couples than it was for heterosexual couples. This disparity is attributed to
homosexual’s “high-risk” lifestyles. This is also believed by Weinberg to be a major
reason why same-sex health insurance is offered only through employee-benefit
programs and not through any insurance companies. However when I looked into the
matter deeper I found an online article by Bobbie Sage with links to insurance companies
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who offer domestic partner health insurance in each state. Every state contained at least
four different companies.
Considering that little is known about the increase in costs associated with
offering such benefits opponents claim that companies are taking on a potentially large
liability by making the benefits available often (95% of companies) at the same price as
opposite-sex couples. Somewhat in contrast to the Catholic Church’s claims that
homosexuals are less likely to stay together because of infidelity, Doughty (2002) found
that one third cohabiting unions (regardless of sexual orientation) last less than one year
and only one in ten lasts longer than five years. This is attributed to the fact that the
relationship may begin and end at any time without legal consequence. This ability to
change partners so easily creates major problems for an employer. Considering that 32%
of employers who offer domestic partner benefits require no waiting period for replacing
one domestic partner for another, there is a high potential for participants to knowingly
abuse the system and drive up insurance prices. In light of the fact that homosexuals are
far more likely to contract HIV and its treatment costs can range from $10,000 - $12,000
per year, there is a very real potential for significant increases in healthcare costs.
There are also tax implications to consider when determining whether or not to
implement domestic partner benefits. For some homosexual couples it is possible to
claim their partner as a dependent if they (1) have the same principle address as the
employee/taxpayer for the year and are a member of the employee/taxpayers household;
and (2) receive from the employee/taxpayer more than half of his or her individual
support for the year. Many same-sex couples do not qualify under this tax code, however.
As a result, the employer must report the fair market value of the health plan as taxable
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income. Doing this raises the employer’s payroll taxes and the amount of gross income
the employee must pay taxes on.
One final argument against offering domestic partner benefits is that when
employers institute a controversial policy it has consequences both on the pool of
applicants an employer can potentially hire for open positions as well as on the
consumers who consider a company’s social policies when making purchasing decisions.
This past year I worked for a local company that badly needed to fill a crucial
position. My boss told me that it is extremely difficult to find employees who are both
qualified for this position and willing to live in Duluth. After a long search, the HR
manager was finally able to find someone to fill this position that appeared a great hire.
However, after a short period the HR manager received a letter from the new employee.
This letter was filled with bible quotes and claimed that homosexuality was an
abomination. Not only that but it called the HR manager a sinner and claimed that he was
going to hell. This left the HR manager in an extremely difficult position. He could not
change the entire company policy but he knew that he would have an extremely difficult
time finding a replacement for this highly qualified employee. Ultimately, after
discussing the matter with the employee, the decision was made to terminate
employment. Last I heard, that critical position in the company was still left unfilled.
Proponents of Domestic Partner Benefits
A major argument for offering domestic partner benefits comes from the fact that
the United States constitution calls for the separation of church and state. The argument
that same-sex marriage or even offering domestic partner benefits legally blurs the
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church’s definition of marriage should thus not be argued based on its religious merits. It
is a legal matter that should be decided based on legal merits. However, the University of
Florida’s Gator Gay-Straight Alliance has published a satirical look at the arguments
made by religious institutions and individuals against same-sex marriage that deserves a
look at:
1. Homosexuality is not natural, much like eyeglasses, polyester, and birth control
are not natural.
2. Heterosexual marriages are valid because they produce children. Infertile couples
and old people cannot get legally married because the world needs more
children.
3. Obviously gay parents will raise gay children because straight parents only raise
straight children.
4. Straight marriage will be less meaningful, since Britney Spears's 55-hour just-forfun marriage was meaningful.
5. Heterosexual marriage has been around for a long time, and it hasn't changed at
all: women are property, Blacks can't marry Whites, and divorce is illegal.
6. Gay marriage should be decided by the people, not the courts, because the majorityelected legislatures, not courts, have historically protected the rights of
minorities.
7. Gay marriage is not supported by religion. In a theocracy like ours, the values of
one religion are always imposed on the entire country. That's why we only
have one religion in America.
8. Gay marriage will encourage people to be gay, in the same way that hanging around
tall people makes you tall.
9. Legalizing gay marriage will open the door to all kinds of crazy behavior. People may
even wish to marry their pets because a dog has legal standing and can sign a
marriage license.
10. Children can never succeed without both male and female role models at home.
That's why single parents are forbidden to raise children.
11. Gay marriage will change the foundation of society. Heterosexual marriage has been
around for a long time, and we could never adapt to new social norms because
we haven't adapted to cars or longer lifespans.
12. Civil unions, providing most of the same benefits as marriage with a different name
are better, because a "separate but equal" institution is always constitutional.
Separate schools for African-Americans worked just as well as separate
marriages will for gays & lesbians.
Since the 1960’s there has been a human rights movement in this country. All
people are increasingly being treated more and more equal in the workplace. Same-sex
couples are just the latest group to want inclusion in this trend. San Francisco was among
a handful of cities that recently passed a law requiring companies to offer the same
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benefits that it offers its other employees. Another major city of note to pass such
legislation was New York, who with an override of Mayor Bloomberg’s veto, now
requires any company working on municipal contracts to provide equal domestic partner
benefits. These trends are expected to continue in the future as well.
More and more people are starting to believe that homosexuality is innate and that
these people must be treated the same way we treat all other types of people. More and
more states, Minnesota included, have enacted laws that prohibit discrimination against
homosexuals in the workplace. This is a trend that appears to be long-term. It is quite
likely that the decision to offer same sex benefits is not a question of if as much as it is a
question of when. Whether people believe that same-sex marriage is acceptable or not,
more and more people believe that everyone deserves equal benefits. If homosexuals are
performing equal work on the job they deserve to receive equal compensation for it.
With an increasing number of companies offering domestic partner benefits it
puts a company at a competitive disadvantage not to. Not offering these benefits limits a
company’s applicant pool for selecting qualified candidates and reduces a company’s
ability to retain the qualified employees it already has. With the impending retirement of
the baby boomers and a shortage of skilled workers to replace them it is virtual suicide to
unnecessarily limit the number of people that would potentially work for a company. The
argument that many people would choose to not work for a company that offers benefits
to same-sex couples is somewhat valid, at least for the time being. However, the baby
boomer’s children are a far more liberal and tolerant generation than their parents. This
means that the number of people who take issue with domestic partner benefits to such an
extent that it would influence their decision of whether or not to accept employment with
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a given company is going to continue to decrease rapidly. The family structure overall is
also changing in this country. In 1970, 40% of the households in the United States met
the traditional definition of a family (mother, father, and kids). Yet, by 1998 this figure
had dropped to only 25%. These numbers suggest that offering domestic partner benefits
may actually help in recruiting and retaining heterosexual employees as well.
Furthermore, the GLBT (gay, lesbian, bisexual and transsexual) market is
currently valued at $641 billion according to the Human Rights Campaign. Sixty-nine
percent of whom have indicated that they base their shopping decisions on whether or not
a company’s policies support fair treatment of GLBT people. Alienating a market
segment this large is sure to have a negative effect on the bottom line.
The Human Rights Campaign has stated that the productivity lost by not offering
domestic partner benefits is quite substantial as well. They assumed that the number of
GLBT in a given workplace is 5% and that the lost productivity from not providing a safe
and equitable workplace is 10%. In a company with 1,000 employees making an average
of $40,000 annually would stand to lose $200,000 per year in lost productivity alone.
In contrast to opponents of domestic partner benefits, Gates (2001) estimates the
cost of offering these benefits to actually be fairly low. Based on U.S. Census Bureau
data, approximately 2.5% of the male population and 1.4% of the female population are
homosexual. Approximately 29% of gay men and 44% of lesbians currently have
partners. Assuming that this is representative of the population in the workforce, a
company with 10,000 employees would have approximately 36 homosexual men and 31
homosexual women employed with them. Of these, 85% of lesbians and 89% of gays are
employed full-time. Gates goes on to assume that 80% of those employed full-time have
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individual benefits from their own employer. Based on these assumptions there would be
only 10 men and 10 women in a company of 10,000 that would request such benefits.
Using the same assumptions from above and factoring in the approximately 4% of
heterosexual unmarried Americans living together, the hypothetical company could
expect that approximately 1.4% of employees would actually request such benefits.
These findings are similar to other studies that have been conducted on the subject. Based
on this, Gates suggests that with so few employees participating in these types of benefits
the costs would actually be quite low.
The argument has been made that offering these benefits increases the number of
COBRA claims requiring the employer to devote time and effort into tracking paperwork.
In reality, employers are not required to offer COBRA to same-sex partners. However, a
company may still elect to do so of its own accord.
Considering that no one wishes harm upon innocent children, the effect that
offering these types of benefits has on the children of same-sex couples is also an
important one to examine. According to Human Rights Campaign data, approximately
one of three lesbian couples and one of five gay couples are raising children nationwide.
Despite the claims that homosexual relationships are less stable than heterosexual
relationships, when a child is introduced into the equation a homosexual unmarried
parent is twice as likely as a heterosexual unmarried parent to be in a long-term
relationship. The fact is there is a substantial amount of evidence in every facet of life
pointing out that same-sex couples are just as stable and competent at raising children as
opposite-sex couples. However, homosexual parents are far less likely to have health
insurance than heterosexual parents. Even if they do have it they are paying far more for
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it than their hetero counterparts. The children of homosexual parents are not entitled to
Social Security survivor benefits either, creating serious burdens in the event of a parent’s
passing. The income tax structure is also set up in a way that encourages same-sex
partners to both work, while offering an incentive for one of the opposite sex partners to
stay home with the kids. This gives an unfair advantage to those who believe that kids
benefit greatly from having a stay-at-home parent.
Proponents of offering these benefits have argued that it is not fair to
disadvantage innocent children. These kids are being raised by loving non-traditional
parents and deserve the same access to healthcare and other benefits as other children.
The argument has been made that if a company is going to take care of some of its
employees’ families it has an obligation to do the same for all of its employees, especially
when the employees are doing the same level of work and contributing the same amount
to the company.
Conclusion
While the religious debate surrounding this issue may continue forever, there is a
clear trend that has emerged in the offering of domestic partner benefits. It is quite likely
that they will be commonplace in the not-too-distant future. Companies need to be aware
of this and plan accordingly. Although there may be a great number of people who still
adamantly appose any recognition of homosexual relationships, this number is already in
the minority. All of the trends in company policies point to the fact that it very well may
be a question of when will a company institute these types of benefits rather than if.
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With costs still very uncertain surrounding the implementation of such a plan,
more conservative companies may choose to hold off on offering such benefits until more
research has been conducted. Anytime there is this much uncertainty surrounding the cost
of a program it creates a large liability for the company. It is up to each individual
company to perform their own cost/benefit analysis as well as examine the type of culture
that best fits their company and make their decisions accordingly. With all of the partisan
politics, perpetually changing laws, and deep spiritual beliefs that encompass this
decision there really is no easy answer of whether or not a company should offer
domestic partner benefits.
Questions
1. Is it blasphemous or in anyway against God to offer domestic partner benefits?
2. Should the children of same-sex parents have the same rights as the children
opposite-sex parents?
3. Is the threat of increased healthcare costs from HIV legitimate enough to have an
impact on the decision to offer domestic partner benefits?
4. Would an employer’s decision to offer domestic partner benefits influence you
decision to work for that employer? To purchase their products?
5. Is it fair to tax same-sex couples and their families differently than traditional
couples and their families?
6. Is the GLBT consumer market large enough to garner significant attention when
making the decision to implement domestic partner benefits?
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7. What type of control measures should companies who decide to implement
domestic partner benefits use in order to ensure they are not being abused?
8. Who should be responsible for the extra taxes that both employer and employee
must pay on health insurance plans?
9. Would recognizing civil unions between same-sex couples alleviate the
controversy surrounding this issue?
10. How would you have handled the situation with the employee who gave the HR
manager the letter calling him a sinner?
11. Does the way a company treats its employees have an effect on your purchasing
decisions?
12. Should heterosexual couples who have the option to get married be allowed to
participate in domestic partner benefits?
Sources
(2004). “The Case for Gay Marriage,” The Economist.com. Available:
http://www.economist.com/opinion/displayStory.cfm?story_id=2459758
(2004) “Special Report: Gay Marriage,” Catholic Answers. Available:
http://www.catholic.com/library/gay_marriage.asp
(2006) “Employers that Offer Domestic Partner Health Benefits,” Human Rights
Campaign. Washington D.C. Available:
“12 Reasons,” Gator Gay-Straight Alliance: University of Florida. Available:
http://grove.ufl.edu/~ggsa/gaymarriage.html
Adam, Barry (2003) “The Defense of Marriage Act and American Exceptionalism: The
“Gay Marriage” Panic in the United States,” The Journal of the History of Sexuality. Vol.
12 no.2.
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Alm, James; Badget, M.V. Lee, and Whittington, Leslie (2000) “Wedding Bell Blues:
The Income Tax Consequences of Legalizing Same-Sex Marriage,” National Tax
Journal. Vol. 53 no. 2 pp. 201-214.
Bennett, Lisa and Gates, Gary J. (2004) “The Cost of Marriage Inequality to Children and
Their Same-Sex Parents,” Human Rights Campaign Foundation. Washington D.C.
Bush, George W. (2004) “President Calls for Constitutional Amendment Protecting
Marriage,” Speech available:
http://www.whitehouse.gov/news/releases/2004/02/20040224-2.html
Cere, Dan (2005) “The Future of Family Law: Law and the Marriage Crisis in North
America,” Institute for American Values. New York, NY.
Demian (2006) “Domestic Partnership Benefits,” Partners Task Force for Gay and
Lesbian Couples. Seattle WA.
Doughty, Steve (2002) “How Live-in Love Doesn’t Last,” Daily Mail. London. January
16. P. 16.
Gates, Gary (2001) “Domestic Partner Benefits Won’t Break the Bank,” Urban Institute.
Washington D.C.
Hamrick, Michael (2002) “Hidden Costs of Domestic Partner Benefits,” Corporate
Resource Council. Available:
http://corporateresourcecouncil.org/white_papers/Hidden_Costs.pdf
Herrschaft, Daryl “How to Achieve Domestic Partner Benefits in Your Workplace,”
Human Rights Campaign. Washington D.C.
Kohut, Andrew; Keeter, Scott; Morin, Richard; Lugo, Luis; Stencel Sandra; and Green,
John (2006) “Pragmatic Americans Liberal and Conservative on Social Issues,” Pew
Research Center for the People and the Press. Washington D.C.
Levada, William (1997) “The San Francisco Solution,” First Things: The Journal of
Religion, Culture and Public Life. August-September. Pp.17-19.
Lombardi, Kristen (2004) “The Catholic War Against Gay Marriage,” The Boston
Phoenix, Issue: March 26 – April 1.
Luther, Samir (2006) “Domestic Partner Benefits: Employer Trends and Benefits
Equivalency for the GLBT Family,” Human Rights Campaign Foundation. Washington
D.C.
McIntire, Mike (2004) “City Council Affirms Domestic Partner Benefits,” The New York
Times. June 29.
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Sage, Bobbie “Insurance Companies that Provide Domestic Partner Benefits,” About.com
Available: http://personalinsure.about.com/cs/healthinsurance1/a/aa052204a.htm
Weinberg, Mark (2002) “Domestic Partners and the Uninsured Issue,” Wellpoint.
Washington D.C.
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