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Businesses Struggling To Provide Domestic Partnership Benefits To Their Employees

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"Businesses Struggling To Provide Domestic Partnership Benefits To Their Employees"

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equaltaxesrights.jpgToday, the Department of Health and Human Services released a report detailing how skyrocketing health care costs are “making it impossible for many small businesses to provide insurance to their employees.” During a roundtable discussion with small business owners and their representatives, Kate Karasmeighan of the National Gay and Lesbian Chamber of Commerce (NGLCC) highlighted businesses’ efforts to provide health care benefits to the partners of gay and lesbian employees:

I was shocked to from out from many of our members with whom we did a survey a few months ago that these employers who want to give full benefits to all of their employees have either stopped giving employees benefits for their families so they are not extending that option for all their employees’ families or they are not giving that option to their LGBT employees who have families.

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While federal law allows married workers who receive family health insurance benefits to deduct the value of that coverage from taxable income, workers who are unmarried and have domestic partners are required to pay taxes on the fair market value of their coverage. As a result, “employees with partner health benefits now pay on average $1,069 per year more in taxes than would a married employee with the same coverage.” As CAP’s ‘Unequal Taxes on Equal Benefits‘ concluded, “collectively, unmarried couples lose $178 million per year to additional taxes.”

Moreover, since the extra income “also increases the employer’s payroll taxes,” employers pay a total of “$57 million per year in additional payroll taxes because of this unequal tax treatment.” Only about 22 percent of employers cover the same-sex partners of their employees and 28 percent cover different-sex partners.”

“The question of either taking that option away from people so they can be equitable to everyone or taking more on in the cost of payroll, so kind of making up the difference in salary for LGBT employees, or just not giving those options to LGBT employees has been a huge problem…every person at this table who is a small business owner has an LGBT employee and is facing the same issue,” Karasmeighan explained at the roundtable.

In 2007, then-Senator Barack Obama co-sponsored the ‘Tax Equity for Domestic Partner and Health Plan Beneficiaries Act,’ which would “amend the Internal Revenue Code of 1986 to extend the exclusion from gross income for employer-provided health coverage to designated plan beneficiaries of employees.”

Transcript:

A large percentage of our members employ a large percentage of gay employees, and for those who don’t know, employers who offer family benefits to their gay employees then have to have those employee benefits for their families taxed as salary. I was shocked to from out from many of our members with whom we did a survey a few months ago that these employers who want to give full benefits to all of their employees have either stopped giving employees benefits for their families so they are not extending that option for all their employees’ families or they are not giving that option to their LGBT employees who have families.

So it’s a real physical pain that these employers are dealing with because they can see it is a moral imperative that anyone who is employing any group of people be able to provide access to health care. And all of these employers understand that. But the question of either taking that option away from people so they can be equitable to everyone or taking more on in the cost of payroll, so kind of making up the difference in salary for LGBT employees, or just not giving those options to LGBT employees has been a huge problem that many of our members are facing and honestly probably every person at this table who is a small business owner has an LGBT employee and is facing the same issue.

The LGBT community makes up about 10 to 15 percent of the population and it’s hard to imagine that there is not a small business out there not being affected by this that is offering benefits to employees’ families. So, you know, it would be great to see—that’s more on the tax side, but certainly a question of how to take advantage of an opportunity of health care that would make an integral difference in the lives of many, many employers and Americans.

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