Navigating benefits programs for employees in all types of families
Employers must address the changing definition of "family," and the corresponding extension of benefits.
Relationships and the definition of “family” continue to evolve. Coupling decreasing traditional marriage rates with increasing frequency of common law marriage, domestic partnerships, civil unions, and single-parent homes, employers are now facing a decision on how to address the extension of benefits both from an HR administration and company culture perspective.
To navigate the changing landscape, benefits managers should consider the following guidelines to create a clear benefits administration framework and maximize the program’s success.
Define your goals
This might sound simple, but clearly defining goals helps answer why your organization should make certain benefits decisions and what the desired impact of those decisions can and should be. Employee satisfaction, recruitment and productivity are all desired outputs and must be considered when building a modern benefits offering.
For example, if your culture promotes a family-friendly workplace, consider ensuring fertility and adoption assistance are included in your benefits package. If your company has been focusing on initiatives to further support diversity and inclusion, extending your program to include domestic partnerships and civil unions could help with those efforts. However, if demand is not present and the additions of these benefits would not provide a clear competitive advantage, prudence should be exercised to dedicate financial and time resources elsewhere.
Know your company’s and employees’ limitations
Before expanding your benefits program, it is important to conduct an analysis of estimated uptake and consider additional costs to your benefits programs. With additional covered members can come greater costs; however, that increase is not as high as many may think. According to an analysis by the Human Rights Campaign of domestic partner benefits cost and utilization, the cost to employers for domestic partner benefits adds less than 1 percent to the overall cost of a company benefits program.
There are also increased costs for employees enrolling in such benefits programs. Under federal tax law for spouses, children, and certain dependents, the portion of an insurance premium that an employer pays for coverage is not taxed as income. However, those in domestic partnerships, civil unions, etc. are not considered “spouses,” and as such if an employee elects to have their partner covered, they will have to pay income tax and Social Security payroll tax on the portion of the insurance premium that their employer contributes to the policy.
Benchmark against peers and competitors
When deciding how to craft a broader employee benefits program, many employers look to their peers.
After the Defense of Marriage Act (DOMA) was overturned in 2015, employers that offered benefits to only same-sex domestic partners had to decide whether to extend those rights to opposite-sex domestic partners as well or to eliminate domestic partner benefits altogether.
According to the International Foundation of Employee Benefit Plans, from 2014 to 2016, the percentage of employers that provided benefits to same-sex partners in legally recognized civil unions fell from 51 percent to 31 percent, and the percentage of employers that provided benefits to same-sex domestic partners fell from 59 percent to 48 percent. However, the trend among large employers has been to maintain domestic partner benefits, with 77 percent of organizations with 10,000 or more employees continuing to offer health care benefits to both same- and opposite-sex domestic partners.
As the makeup of relationships and families continues to transform, state and federal law and regulations change, and talent recruitment becomes more competitive, it is imperative that benefits managers continue to evaluate and update your company’s benefits package to address the demands and needs of tomorrow’s workforce. Taking a strategic, systematic and solution-focused approach that aligns with your business values will deliver the best results for your company and your employees.
Read more:
- 10 ways employers are becoming more family-friendly
- Employer-sponsored health coverage still lagging for same-sex spouses
- Take proactive steps to avoid LGBT discrimination lawsuits