A small but growing number of large employers have begun implementing
policies that offset the additional taxes employees who have same-sex spouses or
domestic partners enrolled in company health benefit plans must pay.
“July 2011 is where this took off and became a bigger issue,” attorney Todd
Solomon, a partner in the employee benefits practice at McDermott Will &
Emery in Chicago, told BNA Nov. 1. “Before 2010, this was on people's radar
screen as an issue, but nobody was doing it.”
Today, Solomon said about 50 companies have adopted policies to provide tax
gross-ups to workers to help cover costs tied to having a same-sex spouse or
partner enrolled in the employers' medical, dental, or vision plans. Grossing up
an affected employee's income involves the employer paying to the worker the
approximate amount he or she must pay in taxes for the partner's coverage.
Citing information from the Human Rights Campaign, a national gay civil
rights organization in Washington, D.C., and a New York Times blog that keeps
track of this trend, representatives at consulting firm Marsh & McLennan
Companies noted Oct. 31 that employers that provide this benefit include
Accenture, American Express, Apple, Cisco Systems Inc., Goldman Sachs, Google,
Microsoft, Yale University, and McDermott Will & Emery, among other law
Solomon was scheduled to discuss the “Life Cycle of Domestic Partner
Benefits” at the 2012 Out & Equal Workplace Summit, held in Baltimore Oct.
29-Nov. 1, but was unable to attend because of weather conditions on the East
During the conference, the Marsh & McLennan representatives announced
that the firm will begin providing “domestic partner tax equalization” in
January 2013. The benefit will be available to all of the firm's married
lesbian, gay, bisexual, and transgender employees, they said, as well as those
who live in states where they cannot legally marry.
Kathryn Komsa, vice president, chief diversity officer, global human
resources, at Marsh & McLennan, and her co-presenter, James Campbell, an
actuary and partner at Mercer, said that the average medical plan cost per
employee is $9,385, according to Mercer's 2011 national survey of
employer-sponsored health plans. Mercer is a Marsh & McLennan
An employer's expected projected cost of tax equalization is $2,500 to $3,500
per employee, they said, though costs will vary based on an employer's actual
plan costs and coverages included. “You can design the benefit to manage that
cost,” Campbell said, noting that there are different ways to do this.
Solomon said that, on average, a lesbian, gay, bisexual, or transgender
employee will pay $1,069 a year in federal taxes for a same-sex spouse's
benefits, according to HRC data.
“This is primarily an issue of pay equity--equal pay for equal work,” he said
of the benefits-related tax employees with same-sex partners must pay. “More and
more companies are saying, 'We don't like that result.' ”
By Rhonda Smith