Insurance Considerations For Domestic Partners

Domestic partners are couples who form a union, who desire to share an exclusive life together, and are of the same sex.

A recent Supreme Court ruling overturned a Texas state ruling that prevented domestic partners from being recognized as “legal partners” for the purposes of obtaining insurance coverage together. This case has caused insurance carriers nationwide—as well as the present administration—to sit up and take notice.

Many insurance carriers take the view that these partnerships pose a high risk of HIV-related claims, thus presenting a greater risk of adverse selection than traditional marriages. This, however, is no more than an educated guess on the part of the carriers. Since such claims have never enjoyed significant coverage in the group health insurance market, carriers do not have accurate actuarial claim tables describing the risks associated with these unions.

Since insurance carriers cannot yet accurately factor this risk into their claims-paid formulae, any that provide domestic partner coverage are likely to hedge their bets with a general increase in premiums. Such a strategy would be unpopular with carriers and clients alike, and most insurers have taken up wait-and-see positions with respect to the domestic partnership issue, hoping against hope that it will go away of its own accord.

Meanwhile, even political conservatives agree that, as a civil rights issue, domestic partnerships are here to stay.

In S.D. Myers v. City and County of San Francisco, a landmark 1999 U.S. District Court decision upheld a 1997 San Francisco ordinance requiring all vendors doing business with the city to prove that their group medical plans provide coverage for domestic partners. At that time, only Hawaii among the 50 states required that carriers provide this coverage. Frantic vendors deluged the city with insurance carrier affidavits indicating that such coverage was not available, effectively bypassing the ordinance. Following recent Supreme Court decisions regarding the constitutionality of sodomy laws—and as the state of Massachusetts flirts with legislation that would make it the first state in the Union to recognize same-sex marriage—such administrative dodges are quickly losing steam.

At present, only a limited amount of states require insurance carriers to provide domestic partner coverage. An additional handful of medical carriers offer such coverage as an optional rider to traditional policies. A competent insurance broker will be able to locate domestic partner coverage on an individual basis in most states. For groups larger than 50 members, such coverage—whether as a rider or as a separate policy—is quickly becoming an industry standard.

For employers and Human Resources professionals, the message is clear: regardless of an individual’s stance regarding the political or moral implications of domestic partner coverage, the handwriting is on the wall. Failure to consider domestic partnerships when constructing or maintaining an employee benefits system will soon constitute a very real competitive liability… and quite possibly a legal one as well.


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