Oregon's Domestic Partner Insurance Mandate
February 6, 2008
On February 5, 2008 the Oregon Insurance Division issued a bulletin mandating that all group health and life insurance policies issued or renewed in Oregon after March 31, 2008 include same-gender domestic partner coverage, if coverage is offered for spouses. (INS 2008-2). This bulletin states that it is intended to guide insurance companies in complying with the new Oregon law that recognizes and authorizes same-gender domestic partnerships in Oregon, HB 2007 (now codified as ch. 99, Oregon Laws 2007). Employers with plans renewing on or after April 1, 2008 will see the change in their policies as of the coming renewal. For employers that have calendar year plans, the change will be reflected in their health and life insurance policies beginning January 1, 2009.
HB 2007 does not mandate that employers provide domestic partner coverage under their group health and life insurance plans. However, the Insurance Division bulletin appears to read such a requirement into the law, stating that an insurer "may issue a policy to an employer only if the employer's health plan is compliant with ch. 99, Oregon Laws 2007." Unless the bulletin is legally challenged as going beyond the requirements of the domestic partner law, Oregon employers who do not currently provide domestic partner coverage likely will have to do so when their policies are next renewed or when new policies go into effect after March 31, 2008. Employers who pay all or a part of the cost of coverage for spouses of employees should consult with their legal counsel regarding whether they are required to pay the same cost of coverage offered to domestic partners.
The mandate applies to all insured group health and life plans in the State of Oregon. It does not apply to self-insured group health plans, regardless of whether the self-insured group health plan purchases stop-loss insurance.
Employers will need to consider what type of documentation of eligibility for coverage will be required of domestic partners. Under the bulletin, insurers must accept the same proof to cover a domestic partner as is required to cover a spouse. Thus, if an employee may cover a spouse without providing a marriage certificate or other documentation, a domestic partner must not be required to submit documentation to prove his or her domestic partner status.
For those plans that require domestic partners to reside together or otherwise define domestic partner in a more restrictive way, the definition may need to be modified for same-gender domestic partners in order to comply with the mandate. Employers may wish to change their procedures to provide that domestic partners will qualify for coverage either if they satisfy the employer's requirements for domestic partnership status or if they are registered as a domestic partner in accordance with HB 2007.
Providing domestic partner coverage raises tax complexities. For federal tax purposes, the value of the employer's contribution toward the coverage of a domestic partner will generally be considered taxable income to the employee. Employees generally may not pay for a domestic partner's coverage on a pre-tax basis through a Code Section 125 cafeteria plan, and may not seek reimbursement of a domestic partner's expenses through a healthcare Flexible Spending Account (FSA). However, for Oregon state income tax purposes, coverage for a same sex domestic partner is treated the same as a spouse. Thus, the value of the domestic partner's coverage is not considered income to the employee for state tax purposes in Oregon.