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Insurance Division Issues Bulletin 2008-2

February 7, 2008

By Thomas I. Kramer

DOMESTIC PARTNER BENEFITS 

As regular readers of our eAlerts may recall, we addressed domestic partner benefits in May 2007, when Senate Bill 2 (SB 2) and House Bill 2007 (HB 2007) had just been signed by Governor Kulongoski, and again on October 26, 2007, in light of the Insurance Division’s draft Bulletin. Since then, the Insurance Division has issued a final Bulletin, revoked it in light of Judge Mosman’s preliminary injunction of HB 2007, and then reissued it as Bulletin 2008-2, following Judge Mosman’s dissolution of his injunction. This eAlert summarizes where we are now with regard to benefits for employees’ domestic partners.

A Brief Review

As noted above, the 2007 Oregon Legislature passed two bills that affect how employers may have to deal with their employees’ domestic partners. SB 2 prohibits discrimination on the basis of sexual orientation. It requires Oregon employers, both public and private-sector, to treat employees’ same-sex domestic partners like spouses for purposes of employment and fringe benefits other than certain employee benefit plans, as summarized below. HB 2007 establishes domestic partner registries for same-sex partners and requires the state to treat same-sex domestic partnerships like marriages in various respects. It was in HB 2007 that the Insurance Division found authority to require insurance policies issued or delivered in Oregon to treat same-sex partners like spouses. This eAlert focuses on that mandate.

Before we get to the insurance mandate, let’s review the kinds of workplace fringe benefits that are subject to SB 2, even though many employers will offer few, if any, of these benefits, or the benefits will not apply to employees’ spouses, making them equally inapplicable to employees’ same-sex domestic partners. Nevertheless, if an employer offers the following fringe benefits to an employee’s spouse, it must offer them to an employee’s domestic partner. Those fringe benefits may include the following:
 
  • Leaves of absence or paid time off, including uninsured and unfunded sick leave or disability benefits;
     
  • Uninsured and unfunded death benefits, including burial expense reimbursements;
     
  • Educational assistance benefits, including most scholarship programs;
     
  • Adoption assistance benefits;
     
  • Automobile or other property or casualty insurance;
     
  • Commuting benefits;
     
  • Dependent care assistance, other than on-site daycare centers;
     
  • Financial planning;
     
  • Outplacement assistance;
     
  • On-site dining or athletic facilities;
     
  • Employee stock option and stock purchase plans; and
     
  • Employee discounts, no-additional-cost services, working condition fringe benefits and de minimis fringe benefits.

Insurance Bulletin 2008-2

As noted above, Oregon Insurance Division Bulletin 2008-2, dated February 5, 2008 (http://www.cbs.state.or.us/external/ins/bulletins/bulletin2008-02.html), is a reissue of Bulletin 2007-6, issued in December 2007 but withdrawn at the end of that month, when Judge Mosman temporarily prevented HB 2007 from taking effect. The Bulletin places requirements on insurers, rather than directly on employers. Here is a summary of what the Bulletin requires:
 
  • Insurance policies issued or delivered in Oregon will have to treat same-sex domestic partnerships like marriages, and same-sex domestic partners like spouses.
     
  • The mandate takes effect for policies issued or renewed on or after April 1, 2008, if those policies are based on forms approved by the Insurance Division before February 4, 2008.
     
  • The mandate takes effect for policies issued or renewed on or after January 1, 2008, if those policies are based on forms approved by the Insurance Division on or after February 4, 2008.
     
  • An Oregon insurer may not issue a policy to an employer that tries to get around the mandate by adopting a “wrap” document that precludes same-sex domestic partner coverage.
     
  • The mandate applies to policies issued to private-sector employers, for whom the policy may insure benefits provided by an ERISA plan, as well as to public employers.
     
  • Insurers may not require greater proof of the existence of a same-sex domestic partnership than they require of the existence of a marriage.

The Bulletin does not address some other questions, on which we obtained informal, non-binding guidance from the Division, as follows:
 
  • The mandate applies only to domestic partnerships that are registered pursuant to HB 2007 and not to domestic partnerships created informally without registration.
     
  • The mandate does not require employers to subsidize the cost of employees’ domestic partners’ insurance coverage, even if they subsidize the cost of coverage for employees’ spouses (though public employers would have to contribute equally due to Tanner).
     
  • The mandate applies to continuation coverage required by Oregon law (the six-month requirement for small groups, the extended continuation on death or divorce after age 55 for large groups, and the early retiree coverage for public employers), but does not apply to continuation coverage required by COBRA.
     
  • The mandate requires employers to offer enrollment to same-sex domestic partners at the same time enrollment is offered to spouses, except that if “special enrollment” is offered for a spouse as required by HIPAA, it does not have to be offered for a domestic partner, unless HIPAA itself would have required special enrollment.

Where We Are Now

Here is an outline of where the rules relating to domestic partner benefits stand in light of Insurance Division Bulletin 2008-2:
 
  • Oregon public employers remain obligated to treat employees’ same-sex domestic partners like spouses for virtually all purposes, except where doing so would conflict with federal law.
     
  • Oregon private-sector employers became obligated on January 1, 2008 to treat same-sex domestic partners like spouses for purposes of employment and fringe benefits other than certain employee benefit plans, due to SB 2.
     
  • Oregon employers that provide benefits pursuant to insurance policies issued, renewed or delivered in Oregon on or after April 1, 2008 will find that those policies treat same-sex domestic partners like spouses.
     
  • Oregon employers that provide benefits pursuant to insurance policies issued, renewed or delivered in Oregon before April 1, 2008 will want to check with their insurers to see when the underlying policy form was approved by the Insurance Division, so they know when the mandate in the Bulletin applies to their policy.
     
  • Oregon employers may be bound by contracts, including provisions like the City of Portland’s Equal Benefits Ordinance, which attaches to certain vendor contracts with the City, or collective bargaining agreements, that affect their rights and obligations with respect to their employees’ same-sex, and possibly opposite-sex, domestic partners.

What To Do

This would be an appropriate time for employers to review their employment policies and their benefit plans to see how they may be affected by SB 2, the Portland Equal Benefits Ordinance, HB 2007 and Insurance Division Bulletin 2008-2. Please remember that benefits employers provide, or amounts employers contribute for benefit plan coverage for an employee’s domestic partner will generally be imputed income, taxable to the employee and reportable on IRS Form W-2. Accordingly, human resources professionals dealing with this issue may want to include their payroll departments or services in the discussion of how and when to implement changes to the employer’s policies and benefit plans regarding employees’ domestic partners.

We realize that these are technically complex issues, in addition to being politically charged. If we can help you deal with the complications, we would be pleased to do so. 
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