New law opens door to benefits for domestic partners.

Changes are afoot in human resources departments, insurance brokerages and insurance carriers in response to a new law taking affect Jan. 1, 2005. Signed by Governor Grey Davis in 2003, the California Domestic Partner Rights and Responsibilities Act of 2003, sometimes referred to its legislative designation Assembly Bill 205, now requires insurance programs to cover state-registered domestic partnerships.

According to the law, domestic partners "shall have the same rights, protections, and benefits and shall be subject to the same responsibilities, obligations, and duties under law ... as are granted to and imposed upon spouses."

Domestic partnerships are established in California when "both persons file a Declaration of Domestic Partnership with the Secretary of State" and meet the requirements established by law.

The implications are large for businesses that provide benefits to spouses of employees. The new law establishes the right for employees to retain benefits for their registered domestic partner if their employer provides benefits to employee's spouses.

The law states that businesses and organizations are not required to offer federal COBRA coverage to domestic partners. However, Under Cal-COBRA, the state's version of the federal COBRA program, domestic partners will be eligible for continuation if they have a qualifying event while covered by an insured plan.

The tax code, however, does not treat domestic partnerships the same as married couples. Employees cannot elect to take any portion of the premium paid towards their domestic partners coverage pre-tax.

Also, any portion of the premium paid by the employer towards the domestic partners coverage is taxable to the employee. Therefore, employers will have to make arrangements to ensure the appropriate taxes are withheld and reported. If an employee registers with their same-gender partner through the State of California, there are no state taxes or S.D.I. on the premiums.

At the time a contract is placed, renewed or amended carriers will ask the employer to define the level of coverage offered by the company.

According to the legislation, the State of California defines domestic partnership as same-sex partners ages 18 years or older or opposite sex partners if one of the partners is at least age 62 and eligible for Social Security benefits.

Domestic partners must reside together and share the common necessities of life, not be married to anyone and have not filed a Statement of Termination of Domestic Partnership within the last six months. Additional conditions must be met in order for a domestic partnership to be established by the government. Undoubtedly, these changes in the law will require changes in employee benefit programs.

Sharon Campise is a Senior Vice President at Peter C. Foy & Associates, a leading employee benefits consulting firm located in Woodland Hills, Calif. She is an account executive in the employee benefits department and specializes in large group insurance.

To learn more about employee benefits and other business services provided by Peter C. Foy and Associates, please contact us at [phone] or visit our Web site at www.pcfoy.com