From: Stephen F Mershon +1 908 582 3511 Date: 14 Jun 94 01:54:00 GMT Lezlie Lee writes: Please let me know if you have any information concerning: o Claims and associated increased costs o AIDS impact on domestic partner benefit claims Here is a high level summary that LEAGUE at AT&T has drafted: Steve Mershon Lesbian, Bisexual & Gay United Employees (LEAGUE) at AT&T stephen.mershon@att.com ------------------------------------------------------------------------- LEAGUE draft November, 1993 Cost of Offering Domestic Partner Benefits The overall added costs to a company of offering Domestic Partner Benefits are typically 1% to 3% of the existing benefits budget, far less than commonly assumed. The 1% figure tends to apply when benefits are offered to same-gender partners only, and the 3% figure tends to apply when benefits are offered to opposite-gender partners as well. There are two primary reasons for the low cost - the sign-up rate is typically 1% to 3% of the employee population, and the cost of insuring a domestic partner is typically less than or equal to the cost of insuring a married partner. As a point of comparison, health insurance costs continue to rise by double-digit percentages every year due to other factors. 1. Sign-up rates are low. o In most domestic partnerships, both partners are employed, and both have good insurance coverage provided by their own employer. Thus, many partners of employees do not need the coverage. o The IRS considers the value of benefits provided to domestic partners to be ordinary income, unlike benefits provided to married partners. Unless the employee's partner can meet the IRS definition of financial dependent, the employee's cost of paying income tax on the market value of benefits received can be significant, and can discourage employees and their partners from signing up. o Due to ongoing homophobia in the workplace and in society, some lesbian and gay couples are so fearful of revealing their orientation that, despite company guarantees of confidentiality, they will not apply for the benefits even if they have need for them. 2. Costs are low. o People in domestic partnerships are, on average, younger than married couples, and thus generally in better health. o The biggest overall expense in most health care plans is attributable to pregnancy-related expenses, including neonatal care and the very high costs associated with premature childbirth. Domestic partners, on average, have a lower rate of childbirth than married couples. o AIDS is not the major cost problem that many tend to assume it is. o AIDS treatment is not overly expensive compared to other illnesses. The average lifetime costs of treating an AIDS patient are around $75,000 (1992 NIH data). This compares to $570,000 for a catastrophic accident leading to quadriplegia, $250,000 for a liver transplant, and $30,000 for a heart bypass. Lifetime costs for an individual with HIV infection/AIDS are generally in the same ballpark as lifetime costs for an individual with cancer or an individual with heart disease. o The spread of HIV infection in the gay male population has been greatly reduced through education, and HIV infection is very rare among lesbian couples. o Companies, municipalities, and universities that offer domestic partner benefits report that claims against health insurance for AIDS have been rare. o The risk of fraud (signing up an HIV-infected acquaintance as an employee's domestic partner for the sole purpose of gaining health coverage) is greatly exaggerated. The signed affidavit of domestic partnership may make the employee legally responsible for the partner's financial debts, and subjects the employee to risks of firing and criminal charges, if fraud is attempted. Companies, municipalities, and universities currently offering domestic partner benefits report that fraud has not been a problem.