In a little more than a decade, domestic partner benefits have gone from virtually nonexistent to the predominant plan among the largest U.S. employers. Some employers are reticent to add health insurance and other benefits for unmarried partners for fear it would cause overall benefits costs to skyrocket. While the history of domestic partner benefits is relatively short, studies and anecdotal data have shown they have little impact on overall costs while potentially making companies more competitive.
Identification
Employers have adopted a wide variety of definitions for domestic partner benefits, but generally, they refer to health or other employee benefits covering an employee's unmarried partner. In defining "domestic partner," companies often require them to be an adult, not related by blood to the employee, living with the employee and sharing some sort of established relationship for at least one year, according to Pepperdine University. Some businesses further limit this definition to the same-sex partners of gay and lesbian employees. Benefits can range from low-cost options such as bereavement or sick leave to the full spectrum of benefits, including health coverage, life insurance and tuition reimbursement.
Size
Domestic partner benefits offerings among employers has increased considerably in past decades. In 1997, only 7 percent of employers offered the benefits, according to Pepperdine University. By 2008, that increased to 36 percent, including 43 percent of large employers. Additionally, as of 2010, 57 percent of Fortune 500 companies offer domestic partner benefits, according to the Human Rights Campaign, an advocacy group for gay and lesbian rights. Fourteen U.S. state governments and numerous local governments also offer the benefits. A 2007 study by Hewitt Associates showed that most companies that offer domestic partner benefits do so for both same- and opposite-sex partnerships.
Value
Domestic partner benefits allow corporations to be more competitive in employee recruitment, as potential employees often rate benefits highly when deciding whether to take a job, according to the U.S. Employee Benefit Research Institute. A 2005 Hewitt Associates study showed that more than two of three companies offering the benefits cited employee attraction and retention as their top reason for doing so. Many employers also consider it an issue of fairness, making sure employees who do not have the option to legally marry their partner have the same benefits as other employees. Even in states that ban discrimination, however, offering domestic partnerships is not a legal obligation, according to the Corporate Resource Council, a nonprofit organization that opposes the benefits and gay rights in general.
Costs
In its 2005 study, Hewitt Associates determined that in the vast majority of companies that offer domestic partner benefits, those benefits comprise less than 2 percent of the total benefits program. The Corporate Resource Council estimates the benefits can increase costs as high as 5 percent, based on a higher risk among gay men for chronic diseases such as HIV/AIDS. The Employee Benefit Research Institute, however, counters that the risk is offset by the lower risk of such diseases among lesbian couples, the generally younger age of people in domestic partnerships and the decreased risk of pregnancy. Pepperdine estimates the usual cost increase to be between 0.02 percent and 2 percent. Additionally, Hewitt's study determined that on average only about 1 percent of eligible employees elect to take the benefits when offered. The Human Rights Campaign suggests this is because many domestic partners have their own insurance coverage already, and the reluctance of some gay and lesbian employees to out themselves at work.
Considerations
If you are considering adding domestic partner benefits to your company, Pepperdine suggests first clearly defining "domestic partner" as it will apply to your company. Once you determine what sort of benefits you plan to offer, you also will have to consider how other benefits -- pensions or survivor income, for example -- will be affected. Additionally, you will have to update benefits materials you distribute to your employees. Those materials should inform employees that they must report to the company when a domestic partnership ends, according to Pepperdine.
