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Why Are Domestic Partners Ineligible For COBRA Coverage?
March 24, 2004
Santa Rosa, CA
Domestic partnerships and same-sex marriages are much in the news these days at a time when employers are increasingly offering benefits to partners of their unmarried employees. Some state and local jurisdictions have passed laws that require employers to provide these benefits, but even where not legally mandated, many private and public employers voluntarily extend benefits to domestic partners, particularly in the area of health care. Continuation coverage for unmarried partners of employees is one health benefit that continues to cause confusion on the part of administrators, employers and employees. This COBRA Tip will define domestic partners and explain why they are not entitled to COBRA continuation coverage.

What is a domestic partner?
A domestic partner may be broadly defined as a person with whom one cohabits in a committed relationship without the sanction of a legal marriage. Some health plans define domestic partner as a person of the same sex as the employee, and others include both same-sex and opposite-sex partners in their eligibility rules. To qualify as a domestic partnership, the parties cannot be related by blood and must be in an exclusive relationship.

Are domestic partners eligible for COBRA coverage?
It is important to understand that COBRA is a federal law. ERISA, the federal law that regulates COBRA continuation coverage in conjunction with the Internal Revenue Code, permits only "qualified beneficiaries" to receive COBRA benefits. Under IRS 1999 final regulations, a qualified beneficiary is defined only as a covered employee, the spouse of a covered employee, or the dependent child of a covered employee.

Due to the highly publicized same-sex marriages that have taken place recently in San Francisco and other cities, arguments may be made that spouses of the same gender as the covered employee should be considered qualified beneficiaries for COBRA purposes because a particular local law considers them to be legal spouses. But such assertions will most certainly fail because of the federal Defense of Marriage Act (DOMA), which was passed in 1996. This law defines "marriage" as a legal union between one man and one woman as husband and wife, and defines "spouse" as a person of the opposite sex who is a husband or wife. Same sex partners cannot be guaranteed federal benefits rights, such as COBRA, because a same-sex partner cannot meet the definition of "spouse" even when the couple marries under local marriage licensing laws.

Is continuation health care coverage available to domestic partners?
Under federal laws, unmarried partners do not qualify for spousal employee welfare benefits, but many employers and plan administrators are subject to state and local regulations that require them to make such health benefits available -- including "COBRA-like" coverage. For example, beginning in 1997, the city of San Francisco required businesses that contract with the city to offer same-sex employee benefits if they offer those benefits to married couples. If employees and their partners register officially as domestic partners, that registration is accepted as proof of domestic partnership for purposes of benefits eligibility.

More private employers are voluntarily offering the equivalent of COBRA coverage along with other domestic partnership benefits. However, the provision of "COBRA-equivalent" coverage can be a major source of confusion. Administrators and employers, as well as employees with domestic partners, often assume that they are subject to the rights, obligations and guarantees provided under federal COBRA regulations simply because continuation health coverage is made available to domestic partners. It is important to remember that such coverage is not, in any way, mandated by COBRA rules -- even when, as is often the case, that coverage is mistakenly referred to as "COBRA."

Offering domestic partner coverage: The Human Rights Campaign Foundation of Washington, DC, reports that, as of February 2004, a total of 7,360 public and private employers nationwide offer domestic partner health benefits. Of these, 6,811 are private-sector businesses, including 211 Fortune 500 companies.

Employers who choose to make continuation health care coverage available to the domestic partners of their employees should always consult with their carriers to determine if plans will accommodate this benefit. Some plans cover only same-sex couples; others will include opposite-sex unmarried couples. Some carriers are reluctant to offer domestic partner benefits and those that do usually require a standard by which to measure whether such a relationship exists. Employees and their partners are often asked to sign affidavits that swear to such factors as cohabitation, length of the relationship, joint ownership of property, and financial interdependence. Some states, including California, New Jersey and Massachusetts, and many cities and counties, have domestic registries in place and official registration is often required to receive domestic partner employee benefits.

Summation: There appears to be a clear national trend toward making health care coverage and other employee benefits available to the domestic partners of unmarried employees. In some cases, this practice is mandated by state and local laws. (Such laws may be challenged in the courts on the ground that they are preempted by ERISA, the federal law that governs employee welfare benefits plans.) But even in the absence of legal mandates, a growing number of public and private employers are voluntarily offering these benefits. When continuation health care coverage for domestic partners is part of your benefits plan, it is important to remember the following:
  1. COBRA does not apply to the partners of unmarried employees because domestic partners are excluded from coverage by the legal definition of "qualified beneficiary" contained in ERISA COBRA law.
  2. Employers may extend "COBRA-equivalent" or other continuation coverage to domestic partners with the approval of their carriers. The type and extent of coverage is not governed by COBRA rules, but it is questionable whether you can legally offer continuation coverage that differs from the coverage you offer to married employees.
  3. If you offer domestic partner coverage, don't forget to set out requirements for proving the existence of the relationship and for notification when the partnership ends.
  4. Avoid language in your plan documents that can mislead employees into thinking that their domestic partners are protected by COBRA regulations. For example, it is a common (and erroneous) practice to include the phrase "domestic partners and dependents" when describing COBRA qualified beneficiaries.
  5. If state or local laws require you to provide domestic partner benefits, consider including in your plan documents a statement similar to this one from the State of Vermont's Domestic Partner Application and Policy:

    Domestic partners and their dependents who are not considered as "qualifying beneficiaries" under federal COBRA provisions will not be eligible to continue their coverage under COBRA after any event that would otherwise give rise to COBRA rights, such as termination of employment or the relationship. Dependents who are not COBRA qualified may be eligible for continuation coverage under the State of Vermont law.
  6. If you choose to voluntarily provide continuation health coverage to domestic partners, consider including a statement in your plan documents that informs employees that continuation health care coverage is not required under federal COBRA laws for domestic partners, but that you are providing that coverage under the same terms that apply to a married employee's spouse.
Domestic partner laws: Here is a sampling of some state laws and municipal regulations that mandate domestic partner benefits:

  • California: Under California law, state employees may enroll domestic partners in their employee health benefit plans. State law also provides that "any employer or contracting agency may, at its option, offer health benefits" to domestic partners. (California Government Code sections 22871(a).) In 2002, California passed legislation requiring health care insurers to make domestic partner coverage available to employers, and, effective in 2006, employers with 200 or more employees working in California will be required to provide health coverage for domestic partners.

    New California laws continue to expand the rights of domestic partners: The California Domestic Partner Rights and Responsibilities Act of 2003 (A.B. 205), effective in 2005, extends the rights and duties of marriage to persons registered as domestic partners. The Equal Benefits in State Contracting Act (A.B. 17), effective in 2007, requires all businesses with state contracts worth more than $100,000 to provide domestic partner benefits for employees in a same-sex relationship if they offer spousal and dependent coverage under their group health plans.

  • Vermont: Since 2001, Vermont has had a "civil union" law, which grants to couples that enter into a civil union the same rights and obligations under state law as married couples. Insurers are required to offer the same coverage to couples in civil unions that they offer to married employees, their spouses and dependents. Because Vermont's civil union law does not sanction same-sex marriages, it does not conflict with the federal Defense of Marriage Act. ERISA preempts state laws that govern employee benefit plans, so employers cannot be required to recognize civil unions under Vermont's law for purposes of offering COBRA to the domestic partners of employees.

  • New Jersey: The New Jersey Domestic Partnership Act, effective July 2004, provides that same-sex partners over 18 and opposite-sex partners 62 or older may establish domestic partnerships by filing an Affidavit of Domestic Partnership and fulfilling other requirements. State laws are amended to require that health benefits for domestic partners be treated in the same way as spouses. The law affects public and private employers, and requires insurance carriers to offer dependent coverage when that coverage is available to married employees under a plan.

  • City of Los Angeles: The Los Angeles Equal Benefits Ordinance requires that contractors who provide benefits to employees with spouses must provide the same benefits to employees with domestic partners. This regulation applies to any city contract over $5,000 and includes contracts for grants, services, construction, leases, and the purchase of goods. Domestic partners are defined as any two adults, of the same or different sex, who have registered as domestic partners with a governmental entity pursuant to state or local law, or with an internal registry maintained by the employer.

  • Tampa: The mayor of Tampa, Florida, has just signed an executive order giving health benefits to unmarried domestic partners of city employees, including same-sex couples. To qualify for benefits, an employee must prove that the couple has lived together in a committed relationship for at least six months, and must notify the city within ten days if the relationship ends.

  • Minneapolis: Effective 2004, private businesses that have contracts of more than $100,000 with the city must offer health care benefits to the domestic partners of employees if they provide such benefits to spouses of employees.

How COBRA OnQue Software Handles These Issues:
  • COBRA OnQue software allows you to enter the name of an employee's domestic partner and enroll that partner in the group health plan. However, when termination or reduction in hours occurs, the COBRA notice that is generated by the software is addressed only to the employee, not to the domestic partner, because that participant is not eligible for COBRA coverage.
  • The software generates Certificates of Creditable Coverage for domestic partners.
This information is provided by OnQue Technologies, Inc. for educational purposes only and does not constitute legal advice. If legal advice or other professional assistance is required, the services of a competent professional should be sought.
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OnQue Technologies, Inc.
As seen in Health Insurance Underwriter Magazine
HIU Magazine, March 2004
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