Golden State Law to Require Equal Benefits for Domestic Partners

October 26, 2004 ( - Golden State plan sponsors will need to be aware of the effects of a new state law that will require all group health insurance policies and health care service plans to provide domestic partners with the same benefits as other spouses.

>The California Insurance Equality Act, signed by Governor Schwarzenegger on September 13, also applies to other types of insurance that are regulated under the California Insurance Code, The Segal Group reported. These include life, accident, and disability insurance, all of which now must be provided to same-sex couples if they are offered to the spouses of other employees.

>This law alters the status quo in the state by requiring that plan sponsors provide these benefits. In the past, the law only required that plan sponsors be provided domestic partner coverage so they could choose to offer it to workers.  Massachusetts, the only state to allow same-sex marriage, has begun to offer benefits to same-sex spouses (See Murky Waters ).

>To be sure of domestic partner qualification, California domestic partners must file for a Declaration of Domestic Partnership with the state. This will establish that the partners share a common residence, are not blood relatives, are capable of consenting, and are both of the same gender unless at least one of them is eligible for Social Security benefits for the aged and is over the age of 62. The declaration also requires that the partners not be married. It is unclear, due to nebulous same-sex rules in the state, whether partners who have not filed with the state are still eligible for the new benefits, according to the Segal bulletin.

>Plan sponsors who provide self-insured benefits, as opposed to insured benefits to spouses, need not alter existing plans. For those who do provide benefits to spouses however, changes must be made by the implementation date. These dates vary by coverage type. For group health coverage that is purchased, renewed or amended through health maintenance organizations (HMOs) and health insurance carriers, the effective date is January 2, 2005. For those with calendar-year plans with 12-month policies in place by January 1 of next year, a one-year extension will be granted. For all other types of insurance, the effective date will be January 1, 2005.

>The new law has limited tax effects. The value of health coverage provided to domestic partners through an HMO or insurance policy, less any amount contributed by the employee, is subject to federal income tax and FICA and FUTA tax withholdings. The coverage is not taxable to the employee if the partner qualifies as a federal tax dependant. For those who file for a Declaration, the value of the coverage is also not subject to state tax.

>The law also makes clear that it does not mandate that health continuation coverage under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) be provided to domestic partners, since the federal law does not provide for these benefits to be distributed to couples of the same gender. However, the Californian version of the law, Cal-COBRA, will allow for the distribution of continuation benefits to same-sex couples.