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Sharing benefits in an unmarried relationship

Not married? Your partner's health insurance may cover you anyway.

Thank the gay rights movement for successfully driving a workplace trend toward domestic-partner benefits that's improving the lives of many committed couples, regardless of sexual orientation or marital status.

At the end of 2002, about 40 percent of Fortune 500 companies along with 6,000 other, smaller businesses, organizations and educational and government entities were offering the same level of health coverage eligibility to live-in companions of employees as they were to workers' spouses, according to a study by the Human Rights Campaign Foundation.

True, the number of companies involved is relatively small, but some very large employers -- the Big Three automakers, for example -- are part of the shift. The number of individuals affected also is limited. But the unmarried-couple count is rising and many of these households include children who could be important beneficiaries of domestic-partner insurance.

"This whole idea of Ozzie and Harriet and the kids as the American standard is just not borne out by reality,'' said Kim Mills, education director for the Human Rights Campaign.

If your company is among those offering domestic partner benefits, here are some things to consider before you sign up.

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Read the rules
In general, companies require that the partner be 18 or older, not related to the employee by blood nor married to someone else. The couple must live in the same permanent residence in an exclusive, emotionally committed, financially responsible relationship, similar to marriage. You may be required to prove this by showing that you share a lease or a mortgage, an insurance policy, utility bills, a joint checking account, etc.

Take taxes into account
While the Internal Revenue Service allows the cost of health benefits for married spouses and their dependents to be tax deductible, it has not yet granted the same rights to unmarried couples. So the amount of money that the employer pays for health insurance for an unmarried partner and any children will be included as taxable income on the employee's W-2.

Some insurers may not agree
While an employer may be willing to pay for these benefits, not all of the insurers whose plans are available to an employee may concur. Some insurers have been fearful that domestic partner benefits will drive up costs. It's possible, for instance, that the less-expensive HMO may demur, while the more expensive Preferred Provider Organization (PPO) or the traditional indemnity plan will be more liberal, notes Alex Wender, director of Deloitte & Touche's Tri-State Human Capital Advisory Services practice. If you have questions, Wender suggests talking to your human resources department or calling the insurer directly.

Share the power
Just because you're the partner holding the policy, that doesn't mean you can make any health care decisions for your partner if he or she is unable to make them. Spouses have much broader rights. A simple legal document called a health care power of attorney can overcome what could be a big issue in an emergency. A health care power of attorney has nothing to do with money. It simply allows the person you designate -- in this case, your partner -- to make medical decisions on your behalf if you are unable. It also can ensure that should you become ill, your partner will be able to visit while you're in the hospital, says family law attorney Maria Gonzalez.

While Gonzalez, a partner in the Florida firm of Young, Berman, Karpf & Gonzalez, recommends getting an attorney to draw up this document, simple forms are available on the Internet. They require signatures of two people other than the person receiving the health care power of attorney and the person giving it. The procedure is straightforward and simple: "I, Mary, designate Joe to make my medical decisions if the doctor decides I'm unable to do so." The document also can specify the names of physicians and limit the use of life-extending procedures, but it doesn't have to be that complicated. Keep the completed document someplace other than a safety deposit box because that could be inaccessible when you need it most.

When it's over, it's over
Most policies require that the employee let the company know right away if their living situation changes. A recent federal court decision left open the possibility that COBRA could cover domestic partners, saying that COBRA regulations that allow a divorcing spouse to keep the estranged spouse's insurance for up to 18 months didn't specifically exclude domestic partners. (COBRA is an acronym for Consolidated Omnibus Budget Reconciliation Act, federal legislation that requires many businesses to keep former employees and their dependents on the group health plan for a limited period as long as the ex-employee pays the premiums.) But right now, the likelihood that an unmarried partner will be able to claim COBRA is slim, Deloitte & Touche's Wender says. That means that the spouse without his or her own insurance could be left high and dry with little or no notice.

For this reason, Gonzalez recommends that partners draw up a domestic partner agreement that includes what will happen to the insurance if the relationship ends. The agreement should include a procedure for notification and a time frame for the partner losing benefits to make other arrangements. "This becomes a binding contract and if the person providing the insurance ignores it, the partner could sue for breach of contract," she says.

A partner can help long-term, too
Health insurance isn't the only benefit available to domestic partners. While long-term care insurers have offered discounts to spouses for years, some are starting to extend long-term care discounts to committed partners as long as they share a household.

Long-term care insurers will not only insure homosexual and heterosexual couples, they'll also consider same or multi-generation family members who are living together, says Nancy Morith, of N.P. Morith Inc., a long-term care consultant based in Princeton, N.J.

Morith says insurers are giving discounts to attract clients who have someone in their lives who is likely to help take care of them. "These policies reflect the fact in the premium that people in a committed relationship are less likely to need a nursing home or an assisted living facility, both of which can be very expensive," Morith says.

Some policies allow a couple to share a pot of money. Others sell each partner an individual policy but allow them to dip into each other's benefit if they should need it. These benefits can save committed partners as much as 25 percent.

These long-term care policies generally require that you live together, but some won't raise the rates if you divorce or split up. Still, because of the nature of the policies -- you quit paying and the policies lapse -- Morith says, "It's wise to have an exit strategy."

Jennie L. Phipps is a contributing editor based in Michigan.

-- Posted: Sept. 23, 2003

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