Wednesday, April 04, 2007

Sauce for Goose, Gander and Other...

It was only a matter of time before two apparently disparate social issues clashed when it comes to health insurance:
According to the Human Rights Campaign Foundation, over half of the Fortune 500 offers domestic partner benefits. It's mildly interesting that the HRC is noted as a "gay rights advocacy group," because DP's could be either homo- or heterosexual. One could argue that it really makes no difference, and, of course, who am I to argue?
Which brings us to the subject of insurance. On the life insurance side of "the biz," the issue of DP's being the beneficiary of an insurance policy is the subject of much debate. The underlying principle is called "insurable interest;" that is, would the beneficiary suffer economic loss at the death of the insured? Obviously, married spouses have an insurable interest in each other; likewise divorced couples have similar issues (child support, alimony, etc). But what about folks who are simply living together? I know a couple who have been "shacked up" for almost 30 years (longer than many married folks stay together) in a loving and monogamous relationship. For a number of reasons, they are not "common law" husband and wife, nor do they wish to be. Yet, who's to say that they have no insurable interest in each other?
Early on in my career, when I was faced with this issue, I always suggested we put down "fiance" in the "relationship to applicant" box. That seemed to satisfy the underwriters. Today, it's not really considered a big deal (although, on a personal note, I would be very disappointed if either of my daughters chose that route).
But what about on the health side? There's no "relationship" box on the application or enrollment form: it's spouse or nothing. Large companies, such as those in the Fortune 500, are typically self-insured, and can write (to a great extent) their own rules, and decide who can, and can't, be included on a plan.
In the individual and small group markets, carriers are free to handle this pretty much however they want (subject, of course, to the various Departments of Insurance). My experience is that most carriers won't include DP's (of whatever sexual orientation) on "family plans." In the individual market, this is really no big deal, since the rates are determined individually for each applicant, and there are few advantages to a "family plan."
One potential advantage, though, is in the category of HDHP's (High Deductible Health plans), which usually have common, family deductibles. The way the HSA's (Health Savings Accounts) are currently enabled, one's "significant other" isn't eligible for tax-advantaged reimbursement from the HSA unless he/she is listed as a dependent on the plan. Since this is often not possible, employees in such circumstances are (perhaps understandably) reluctant to opt for these consumer driven health plans.
Such folks will have to wait until the gummint decides their plight is legitimate, and/or wishes to potentially increase the number of folks who choose an HSA.
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