Beginning January 2005, newly issued, amended or renewing
California health insurance policies and health care service
plans (HMOs) that provide coverage for spouses must cover
registered domestic partners in an identical fashion.
The new law, AB 2208, also applies to other types of
insurance regulated by the Department of Insurance,
including life and disability.
What this means...
If you provide insurance benefits for your employees'
spouses, you must provide the same level of benefits to
employees' registered domestic partners.
For example:
- If you pay for 100% of a spouse's health care premium,
you must pay 100% for a domestic partner's health care
premium;
- If you pay 80% for spousal coverage, you must pay 80%
for domestic partner coverage;
- If you do not pay for spousal coverage, you do not have
to pay for domestic partner coverage.
What qualifies as domestic partnership?
Domestic partners that have filed a valid Declaration
of Domestic Partnership with the State of California are
guaranteed coverage. Employers may choose a more lenient
definition (based on local laws, for example).
The declaration establishes that the domestic partners:
- have a common residence
- are not married or in a domestic partnership with
someone else
- are not related by blood
- are both at least 18 years of age
- are capable of consenting
- are the same sex OR one is age 62 or older and is
eligible for Social Security benefits
Watch out for...
The federal and state differences can be tricky.
Federal: Because the federal government does not
recognize domestic partners as qualified dependents,
premiums paid by the employer for domestic partners are
considered federal taxable income and employee contributions
will be post-tax.
Registered domestic partners do not qualify for federal
COBRA protection. In addition, Section 125 plans or HSAs
cannot be used to pay for domestic partner health expenses.
California: Premiums for domestic partners
registered with the State of California are not considered
taxable income by the state. However, if the employer is
using a more lenient (e.g. local law) definition of domestic
partner, premiums for domestic partners not meeting the
state criteria are also subject to state income tax. Consult
your accountant or payroll provider for help with the
accounting.
Domestic partners registered with the state are eligible
for Cal-COBRA protections.
What employers should do...
When your benefits plans renew and when you hire a new
employee:
- advise employees of the opportunity for spousal/domestic
parther coverage in writing (we're working on a template)
- update and distribute your employee handbook and/or
company policies
- at open enrollment, emphasize your company's policy and
that this is the time to enroll domestic partners
The law...
The legislation, AB 2208, also known as the California
Insurance Equity Act, applies to all forms of insurance
regulated by the Department of Insurance (including life,
disability, auto, rental, etc.)
