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Bucks: Cambridge, Mass., Equalizes Cost of Health Insurance for Gay Workers

June 16, 2011 by Leave a Comment

What if You're Gay - Your Money - Bucks Blog - NYTimes.com

The city of Cambridge, Mass., may be the first municipality to equalize the cost of health benefits for its gay employees, following the lead of many corporations.

Unlike married couples, employees who use domestic partner health coverage for their partners must pay taxes on the value of that coverage (unless the partner is considered a dependent). If the federal government recognized same-sex marriage, these couples could avoid the tax since it doesn’t apply to heterosexual married people. On top of that, employees can’t use pretax dollars to pay for their partner’s insurance premiums — another bonus that’s available only to opposite-sex married couples.

So after Cambridge officials were made aware of the issue through a city employee who had to pay the extra taxes, they decided to reimburse employees for the extra costs. The policy will go into effect on July 1 for nonunion employees; it will go into effect for union employees “pending collective bargaining obligations.”

“The tax implication for same-sex married couples working for the city created an unfair situation that the City Council chose to address,” David Maher, the Cambridge mayor, said in a statement. “This action is the right and fair thing to do until the federal government addresses this issue.”

An increasing number of companies have started to reimburse employees with same-sex partners who are covered by the insurance. (In fact, some organizations have even extended the policy to their employees with opposite-sex domestic partners.)

Massachusetts is one of the five states, in addition to the District of Columbia, that issues marriage licenses to same-sex couples.

“Cambridge is indeed the first municipality to gross up city employees’ benefits to account for unequal treatment under federal law,” said Sarah Warbelow, state legislative director for the Human Rights Campaign. “While it is hard to say with certainty, I think many cities and counties will want to follow suit. Particularly, those located in states with marriage equality or civil unions/ domestic partnerships.”

After learning about the issue, the City Council passed a “policy order” that requested that the city manager figure out a potential solution, said Lee Gianetti, the mayor’s chief of staff. The city spoke with private sector employers that had adopted the policy, including Google, about their approach. Ultimately, the city decided to pay employees a quarterly stipend equivalent to 20 percent of the taxable income that the employee incurred as a result of the insurance.

In a letter to the Cambridge City Council, the city’s personnel director, Michael P. Gardner, said that the 20 percent figure was recommended as “the best estimate of the marginal tax rate for more persons who would be eligible for this benefit.”

The city currently provides health or dental insurance benefits to the same-sex spouses of 22 city and school department employees. Reimbursing city employees will cost the city  about $12,000, while it will cost another $21,000 for school department employees, who are largely unionized.

The letter also recommends that if the federal tax law changes, “ending the unequal treatment of spousal benefits,” the city should end the subsidy program.

Many states and municipalities are focusing on reining in budgets, but do you know of any other municipalities that are mulling this over? Which do you think might be next?

Article source: http://feeds.nytimes.com/click.phdo?i=54398c3fae54a5a073a38839c27d74ad

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Bucks: Employer Error Causes Tax Problem for Gay Couple

June 3, 2011 by Leave a Comment

What if You're Gay - Your Money - Bucks Blog - NYTimes.com

Most of us pay income taxes because we know we have to. But what happens when you fail to pay an obscure tax that you never heard of — and that your employer should have told you about?

That’s the predicament that Thomas Satterwhite, a plastic and reconstructive surgery resident at Stanford Hospital Clinics, and his partner, Harald Frohlich, a kindergarten teacher at the San Francisco School, have found themselves in.

Since Stanford generously offers health insurance to its employees and their families for free, Mr. Frohlich said he decided to use its health coverage, which the hospital also extends to domestic partners. Unlike married couples, those who use domestic partner coverage must pay taxes on the value of that coverage unless the partner is considered a dependent. If same-sex couples were allowed to marry, they could avoid the tax like their heterosexual counterparts.

Employers who offer domestic partner insurance usually take care of the tax issue by including the “imputed income” on their employees’ paychecks, and the appropriate taxes are withheld. Or, as an increasing number of employers have chosen to do, they reimburse employees for those extra costs.

But Stanford never properly accounted for the income. Nor is it the first employer to run into this issue. Yale University made a similar error earlier this year that affected 61 employees.

Dr. Satterwhite received a letter in April from the hospital’s human resources department, which said it had discovered the error during a system audit. “We were not aware there was a tax when you are a domestic partner,” Mr. Frohlich said. “And then we got that letter, which was a big surprise.”

By his estimation, the hospital didn’t include the taxes, of about $270 a month, for nearly three years. As a result, he said his partner would have to amend his tax returns for those years, and will probably owe $7,000 to $8,000 in back taxes, plus any penalties or interest. If the couple had known about the extra taxes, Mr. Frohlich said, he would have used the insurance provided by his own employer.

The couple wrote a letter to the hospital’s benefits manager saying they believe that Stanford should cover the costs because it didn’t properly inform them from the start. At the very least, the letter said, they would like Stanford to pay for the costs associated with amending Dr. Satterwhite’s tax returns for the past three years, plus any potential penalties or interest.

Stanford declined to say whether this issue was isolated to the one couple, or if the problem was more widespread. “Our benefit program here for domestic partners provides the same level of coverage as it does for spouses,” said Gary Migdol, a spokesman for Stanford Hospital Clinics. “Due to confidentiality issues, we cannot comment on a specific employee. However, if an employee raises concerns about an issue related to his/her benefit package, it is investigated thoroughly and appropriate action is taken.”

Do you know of any other employees at Stanford Hospital employees or elsewhere who have encountered this problem? And what do you think Stanford should do?

Article source: http://feeds.nytimes.com/click.phdo?i=d97b3a1e403ada47cac501f71455e6d3

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Bucks: Gay Couples May Get Medicaid Protections

April 8, 2011 by Leave a Comment

What if You're Gay - Your Money - Bucks Blog - NYTimes.com

Same-sex couples are one step closer to receiving protections that heterosexual married couples get when they receive long-term care through Medicaid — that is, the healthy partner will be able to keep some of the ailing partner’s money and remain in their home.

At least, that’s the goal. Right now, only opposite-sex married couples receive those rights because the federal government doesn’t recognize same-sex marriage.

To qualify for long-term care through Medicaid, individuals generally have to spend their money until it’s practically depleted. But married couples can keep more money so that healthy spouses don’t have to impoverish themselves to qualify the sick spouse for care. Nor do they have to worry about giving up their home to raise money to pay back Medicaid for its services after their spouse dies. They can stay put for the rest of their lives.

As a work-around, the Obama administration is close to notifying the state-run Medicaid programs about how they can replicate these protections for same-sex domestic partners, according to the Centers for Medicare and Medicaid Services. But it remains to be seen how the protections will be extended so that they don’t interfere with the Defense of Marriage Act, the federal law known as DOMA, which defines marriages as a legal union between a man and a woman.

“We are working on new guidance in this area, which we expect to issue very soon,” said Mary Kahn, a spokeswoman for the centers. The guidance, which will be issued to the states, will point out what “freedom and flexibilities exist in current law to create more equal treatment for same-sex partners.”

Yet while the federal government is informing the states that they have the legal authority to extend these protections, gay advocates say it may ultimately be up to the states to adopt them.

“We are talking about couples who have spent their entire lives together who have to choose between long-term care for a sick partner and everything they have,” said Michael Adams, executive director of Sage, an advocacy organization for elderly people in the gay community. He added that his group would be lobbying the states to adopt the new policy. “This is a matter of basic human decency. We now have the opportunity to see those protections extended in every state of this country.”

In some cases, not being married can actually work to a gay couple’s advantage: healthy partners who have always held most of the couple’s assets in their name can keep everything — after all, they’re viewed as legal strangers in the eyes of the law.

But more often, experts say, the lack of spousal protections hurts gay couples, especially lower-income people where the healthy partner is at risk of being forced out of their home. If the home is in the sick partner’s name, for instance, the healthy partner risks losing the property right away or when the partner dies, according to a briefing paper on the topic by Sage. Even if the home is jointly owned, the healthy partner is still at risk: Medicaid will probably place a lien on the property, which is problematic if the partner receiving long-term care dies or if the healthy partner wants to move.

In addition to the home, heterosexual married spouses can keep household goods, a car and burial funds until his or her own death. “In contrast, a same-sex health partner risks losing any or all of these assets unless the assets have been in the sole name of the healthy partner for at least five years,” the Sage paper said.

They are also subject to higher thresholds for other assets. Though Medicaid qualification rules vary across the states, the heterosexual healthy spouse is generally entitled to keep the greater of $21,192 or half of their money up to a maximum of $109,560 (though some states allow the healthy spouse to keep that entire amount). But an ailing gay person must apply as a single individual and is generally entitled to keep only $2,000. And his or her partner isn’t entitled to any of the ailing partner’s other assets.

And it’s not as if the sick partner can simply shift the assets to the healthy partner — if a transfer is made within five years of applying for Medicaid, it could disqualify the ailing partner for a certain period of time based on the value of the assets transferred.

The government’s effort to equalize the playing field sprang from a 2010 presidential memorandum on hospital visitation, which directed the Department of Health and Human Services to address “the rights of patients to designate visitors, regardless of sexual orientation and gender identity.” In addition, the memo directed the department to explore additional steps it could take to improve the lives of lesbian, gay, bisexual and transgender people.

A summary of those efforts, released last Friday, is on the department’s Web site. A spokesman for Medicare said the department was close to releasing updated guidance that would address both the new hospital visitation rules and hospitals’ compliance with existing regulations on advance directives. Those directives allow patients to designate who they want to make medical decisions for them when they are unable.

Do you think the state-run Medicaid programs should be required to extend these spousal protections to same-sex partners?

Article source: http://feeds.nytimes.com/click.phdo?i=a7baab2e930942e05680feb726db4909

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