Now Hear This

When the Walt Disney Co. began offering benefits to the domestic partners of its homosexual employees, it came under fire from many conservative groups. But few companies get that kind of attention for making an internal policy decision--in fact, most businesses implement domestic partner benefit programs without so much as a public ripple.

According to Ken McDonnell, a research analyst with the Employee Benefit Research Institute in Washington, DC, domestic partner benefits are one way employers are responding to the changing demographics of their work force. The statistics show the need: In 1960, 76 percent of U.S. households were headed by a legally married couple, compared with only 55 percent in 1995. In 1960, only 21 percent of households consisted of two or more unrelated individuals, but by 1995, that number had increased to 39 percent.

Health insurance gets most of the attention in discussions of domestic partner benefits, but McDonnell says that when you begin to explore the issue, you may find that your employees really want acceptance of their relationships in terms of other benefits, such as family leave. Begin the process by looking at your benefits plan in its totality, consider the demographics of your work force, and survey employees to determine the degree of interest. Other points McDonnell says you'll want to consider include the following:

vDetermine who will be eligible. Decide whether to extend the benefits to unmarried heterosexual and homosexual partners, or homosexual partners only. "Some companies, like IBM and Lotus, have extended their benefits only to homosexual employees' partners because heterosexual couples can opt to marry legally while homosexual couples cannot," McDonnell says. "Both companies have stated that once homosexuals have the right to legally marry, they will drop the benefits because they will no longer be needed."

vDecide on the proof required to show that a committed relationship exists. Although married couples have a state-issued marriage certificate, in most cases, domestic partners do not have any sort of legally-binding certification. You may consider such items as a joint lease or mortgage, joint bank accounts, or a signed affidavit to be proof of a committed relationship.

vResearch and explain the costs. There is a financial and tax impact for both your company and the employee when you extend insurance benefits to domestic partners. Consult with your insurance agent and tax advisor, and be sure your employees understand what the program will mean in terms of out-of-pocket costs and tax consequences.

McDonnell says that most private-sector employers offering domestic partner benefits tend to have a young, liberal, talent-driven work force that values this type of benefit for their own use or because it projects a liberal image of the company. Companies have viewed domestic partner benefits as an important tool in employee retention and maintaining a positive corporate image. McDonnell also points out that utilization of domestic partner insurance coverage has been much lower than anticipated, probably because working domestic partners tend to get health insurance through their own employers.

This article was originally published in the November 1997 print edition of Entrepreneur with the headline: Now Hear This.