Legislation Proposed to Extend Domestic Partner Benefits to Federal Government Employees

Todd Solomon
January 11, 2010 — 2,734 views  
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If passed, a proposed federal law entitled the Domestic Partner Benefits and Obligations Act will extend long-awaited comprehensive benefits to same-sex domestic partners of federal employees.

The bill was first introduced in both houses of Congress in 2007; however, both versions of the bill died after the committees to which they were referred failed to vote on them.  On May 20, 2009, the bill was reintroduced in the Senate by Joe Lieberman (I-CT) and Susan Collins (R-ME) and in the House of Representatives by Tammy Baldwin (D-WI) and Ileana Ros-Lehtinen (R-FL).  The House bill currently has 138 co-sponsors and was approved by the House Oversight and Government Reform Committee in a 23-12 vote on November 18, 2009.  The Senate bill currently has 26 co-sponsors and was approved by the Committee on Homeland Security and Government Affairs in a 8-1 vote on December 16, 2009.

Same-sex domestic partners of federal employees were extended certain limited benefits in June 2009 when President Obama issued a Presidential Memorandum directing that such limited benefits should be extended when doing so is consistent with federal law.  More comprehensive benefits, such as coverage under federal health insurance plans and benefits under federal pension plans, can only be extended to same-sex domestic partners of federal employees by an act of Congress.  The proposed law provides that a federal employee and his or her domestic partner will be entitled to all of the benefits available to a federal employee and his or her spouse.  The comprehensive benefits include federal health insurance and enhanced dental and vision benefits, retirement and disability benefits, family, medical, and emergency leave, group life insurance, long-term care insurance, compensation for work injuries, benefits for disability, death, or captivity, and certain travel and transportation related benefits.  In addition, the proposed law will also require a federal employee and his or her same-sex partner to comply with the legal obligations that apply to a federal employee and his or her spouse, such as anti-nepotism rules and financial disclosure requirements.

However, unlike benefits extended to a federal employee’s spouse, federal employees receiving domestic partner benefits under the proposed law will be federally taxed on the fair market value of the benefits in most instances.  Because the federal Defense of Marriage Act defines marriage for all purposes of federal law as a union between one man and one woman, the exclusion of the value of benefits provided to an employee’s spouse from employee’s taxable income will not apply to benefits provided to an employee’s same-sex domestic partner unless the domestic partner qualifies as the employee’s dependent.  Domestic partners will rarely qualify as an employee’s dependent due to the narrow definition of dependent under the federal tax code.  Unlike premiums for opposite-sex spouses, the cost of a nondependent domestic partner’s health coverage cannot be paid on a pre-tax basis under a so-called “cafeteria plan” and instead can be paid only by the employee with after-tax premiums.  The fair market value of domestic partner benefits will also be subject to state income taxation in the majority of states.

To receive the domestic partner benefits provided under the proposed law, federal employees will be required to file an affidavit with the Office of Personnel Management certifying that the employee and his or her domestic partner (1) are each other’s sole domestic partner and intend to remain so indefinitely, (2) share a common residence and intend to continue the arrangement, (3) are at least 18 years of age and mentally competent to consent to contract, (4) share responsibility for a significant measure of each other’s common welfare and financial obligations, (5) are not married to or domestic partners with anyone else, (6) are same-sex domestic partners and are not related in such a degree that would prohibit legal marriage in the state in which they reside if the couple were of the opposite-sex, and (7) understand that willful falsification of information within the affidavit may lead to disciplinary action and the recovery of the cost of the benefits received related to such falsification and may constitute a criminal violation.  Federal employees and their domestic partners receiving benefits under the proposed law will also be required to file a statement of dissolution upon the death of the employee or domestic partner or upon the end of the domestic partnership.

According to UCLA’s Williams Institute, approximately 30,000 federal workers are in committed relationships with same-sex domestic partners.  In testimony before the Senate Committee on Homeland Security and Government Affairs, the Office of Personnel Management estimated that the cost of providing health and retirement benefits to the same-sex domestic partners of federal employees would cost approximately $633 million over 10 years.  The cost for 2010 would be approximately $56 million, which is just two-tenths of one percent of the total annual employee health insurance costs paid by the federal government.

The bill proposes that, if passed, the new law would take effect six months after enactment and would apply to all federal government employees except for those employed in the armed forces.  Although domestic partner benefits have become prevalent in the private sector with nearly 60% of Fortune 500 companies providing such benefits and are already provided by the governments of 22 states and over 150 local jurisdictions, the new law would represent a dramatic sea change and would signal that the prevalence of domestic partner benefits in corporate America has spread to all levels of the public sector.

Todd A. Solomon is a partner in the Employee Benefits Department of McDermott Will & Emery’s Chicago office. He is the author of the third, fourth and fifth editions of Domestic Partner Benefits: An Employer’s Guide, and was the co-author of the book’s first and second editions.

Brian J. Tiemann is a member of the Employee Benefits Department in the Chicago office of McDermott Will & Emery.

Todd Solomon

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Todd A. Solomon is a partner in the law firm of McDermott Will & Emery LLP based in the Firmís Chicago office. As a member of the Employee Benefits Department, Toddís practice is concentrated primarily on designing, amending, and administering pension plans, profit sharing plans, 401(k) plans, employee stock ownership plans, 403(b) plans, and nonqualified deferred compensation arrangements. He also counsels privately and publicly-held corporations and tax-exempt entities regarding fiduciary issues under ERISA, employee benefits issues involved in corporate transactions, executive compensation matters, and the implementation of benefit programs for domestic partners of employees. A portion of his practice consists of advising clients on fiduciary and plan investment matters. Todd has experience counseling plan fiduciaries with respect to investment policies, alternative investments (e.g., hedge funds, limited partnerships, real estate), prohibited transaction issues, investment management agreements, and payment of expenses from plan assets.