Date: Mon, 19 Jun 1995 13:22:07 -0700 (PDT) From: John J Winters ********************************************************** PRELIMINARY FINDINGS ON THE EXTENSION OF HEALTH BENEFITS TO THE DOMESTIC PARTNERS OF UC FACULTY STAFF AND STUDENTS INTRODUCTION This report identifies the policy, legal and financial issues relevant to consideration of extension of health benefits top the domestic partners of UC faculty, staff and students. The report is a joint effort by members of Academic Affairs, Employee Benefit Programs, and Human Resources, in consultation with the Office of tht General Counsel. BACKGROUND In April 1994, the University of California Academic Council recommended extending health, pension and survivor benefits, as well as campus amenities, to the domestic partners of employees and their children based on an extensive report provided by the University Committee on Faculty Welfare. The council of UC Staff Assemblies (CUCSA) and the UC Lesbian, Gay and Bisexual Association (UCLGBA) have also expressed an interest in and support for exploring this issue. IN conducting research on this subject, other universities, including the "comparison eight" institutions utilized for faculty compensation studies, were contacted to obtaininformation about their policies and practices with regard to providing benefits to domestic partners. On April 25, 1994 President Peltason requested the following analyses: * The legal implications of possible adoption of the Academic Council's recommendations, as well as whether a decision to recognize domestic partnerships is within the authority of the Board of Regents. * How a domestic partners policy might affect the University's academic programs, that is, would its adoption contribute to the effectiveness and quality of UC's teaching, research, and public service activities. * The estimated costs of implementing the Academic Council's recommendations, as well as the source of funding. Information regarding the impact on academic programs and the estimated costs of benefits is included in this report. The legal analysis has bee provided to the President under separate cover by the Office of the General Counsel. It is noted that although the Academic Council recommended extending the domestic partners pension, survivor, and campus amenity benefits along with health benefits, the findings which follow relate primarily to health insurance coverage because of the cost implications of this particular benefit and the potential impact on others in the University community. A brief listing of other policy or program areas that would be impacted by a University policy to extend benefits to domestic partners is also included. However, detailed discussions of the impacted areas, such as extension n of the application of personnel provisions regarding sick leave beyond family members to include domestic partners, can be addressed in future reviews. A consistent position/policy on domestic partners needs to be established initially. Some campuses (Berkeley, Davis, Santa Cruz) are already providing access to campus services and facilities to domestic partners on the basis that an employee or student may designate any individual for such services. A similar approach is used in staff personnel policies whereby employees may utilize bereavement leave not only for relatives, but also for another person to whom the employee has a personal obligation, without specific reference in the policies to domestic partners. UC NONDISCRIMINATION POLICY STATEMENTS There are two University of California policies that are germane to the issue of domestic partners: the policy on Nondiscrimination in Employment and the policy on Nondiscrimination on the Basis of Sexual Orientation. Presidential policy includes the following statement: The University of California, in accordance with applicable Federal and State law and University policy, prohibits discrimination against or harassment of any person employed by or seeking employment with the University on the basis of race, color, national origin, religion, sex, physical or mental disability, medical condition (cancer-related), ancestry, marital status, or age. The University of California also prohibits discrimination on the basis of sexual orientation, status as a Vietnam era veteran or special disabled veteran, or, within the limits imposed by law or University policy, on the basis of citizenship. The Regents of the University of California Policy Statement on Nondiscrimination of Basis of Sexual Orientation reads: It is the intent and direction of the Board of Regents that the University's policy against legally impermissible, arbitrary, or unreasonable discriminatory practices shall be understood and applied so as to prohibit discrimination on the basis of sexual orientation. FINDING: The UC nondiscrimination statements prohibit discrimination based on sexual orientation. Thus as a matter of policy, the University will not discriminate against employees because they are gay, lesbian, or bisexual. Similarly, University policy prohibits discrimination based on marital status; therefore, the University will not discriminate against employees because they are married or unmarried. CURRENT UC POSITION ON DOMESTIC PARTNERS As a public institution chartered in the California State Constitution, and funded in large part by public funds, UC has historically chosen to follow the State's lead in matters of public policy. In order to be entitled to certain privileges and benefits, Stat statutes stipulate that one must be a legally recognized "spouse" of a State employee {Cal. Gov. Code Sec. 22754(f).} Therefore, the University's position has traditionally been that until or unless there is a change in the law defining "spouse" it would not be appropriate to go beyond the State in granting an expansion of privileges and benefits to domestic partners. FINDING: The above position is the historical practice of the University on social policy issues which do not have a unique impact on the overall mission of the institution. The Regents may determine that the University should continue to follow the State as a matter of policy. The General Counsel has advised that the Regents is not legally barred from extending health benefits to domestic partners; however, extension of benefits only to same-sex domestic partners could give rise to claims of unlawful discrimination based on sexual orientation. Additionally, the University is dependent on the Governor and the State Legislature for a significant portion of its funding. The issue of extending benefits to domestic partners is currently being debated in the political arena. As noted below, the California Legislature has not yet made a determination on teh issue. The timing of any decision by the University on a politically sensitive issue, on which members of the legislature hold differing views, needs to be considered carefully. A decision by the University to expand the definition of benefit eligibility beyond that applicable to State employees could raise concerns withing the Legislature or the Governor's Office regarding expenditure of financial resources and/or could affect the decision-making process on the University's overall budget. CALIFORNIA LEGISLATION REGARDING DOMESTIC PARTNERS Three bills pertaining to domestic partners have been introduced during the current 1995 State legislative session. These bills are very similar to the two domestic partners bills that were introduced, but failed to become law, during the 1994 session. The bills could have an effect on the historical position of the University if enacted into law: AB627 (Katz) This bill defines domestic partners; provides criteria for establishing a domestic partnership; provides for the registration of domestic partners with the Secretary of State; requires a health facility to allow a patient's domestic parter to visit a patient; and allows domestic partners to be on a par with spouses with regard to acting as conservators and willing property to one another. Status of bill: Introduced in Assembly, Feb 21, 1995. First hearing in Assembly Judiciary Committee on March 29, 1995; failed passage; reconsideration granted. AB 1209 (knox) and SB 1159 (Hayden) These are companion bills that would add an article to the Public Employees' Medical and Hospital Care Act (PEMHCA), which is the law governing health benefits for the Public Employees' Retirement System (PERS). The bills would authorize state and local employers TO ELECT to include within the definition of "family member" domestic partners, as defined, who have submitted certificates of eligibility to the Board of Administration of the PERS, thus allowing employers the ability to offer health coverage to th domestic partners of their employees and annuitants. These bills do not directly impact the University's health and welfare benefits since UC does not currently extend health benefits to domestic partners nor is UC mandated of bound to do so under the provisions of the bill. The University, however has generally followed PEMHCA in regard to overall benefit policy. Status of bills: AB1209 introduced in the Assembly on Feb 23, 1995. First hearing set in Assembly Public employees, REtirement and Social Security Committee April 19, 1995; cancelled at request of author. SB1159 introduced in the senate on Feb 24, 1995. First hearing in Senate Public Employment and Retirement Committee on April 17, 1995; failed passage. All three bills have the same criteria for establishing a domestic partnership, as follows: *Both persons have a common residence. *Both persons agree to be jointly responsible for each others basic living expenses during the domestic partnership. *Neither person is married or a member of another domestic partnership. *The two persons are not related by blood in a way which would prevent them from being married to each other in this state. *Both persons are at least 18 years of age. *Both file a Declaration of Domestic Partnership with the Secretary of State (AB 627) or a certificate of eligibility with the Board of Administration of the PERS (AB 1209 and SB 1159). FINDING: Enactment of AB 1209 and SB 1159 and amendment of the PEMHCA to allow coverage for domestic partners would provide an opportunity for the University to review whether benefits should be extended to the domestic partners of UC employees and annuitants. The University has historically followed the PEMHCA in determining many benefit policies, such as who is considered to be a family member. IMPACT OF A DOMESTIC PARTNERS POLICY ON STUDENTS AND FACULTY In response to President Peltason's request for an analysis of how a domestic partners policy might affect the University's academic programs, Academic Affairs reports that students have long supported a domestic partners policy, and that adoption of such a policy could contribute to a greater sense of community among students by demonstrating acceptance of individuals with different lifestyles. The campuses report that there has been at least on faculty recruitment that has failed due to a lack of domestic partners benefits policy. There is some sentiment among the Academic Vice Chancellors that such a policy would be helpful in the recruitment and retention of faculty. In addition, a large number of individual faculty have written to President Peltason encouraging the adoption of a policy on the basis of equity/fairness, nondiscrimination and morale. With regard to academic programs, Academic Affairs indicates that the adoption of a domestic partners policy would clearly indicate a tenor of inclusion and endorsement of gay, bisexual and lesbian issues within the University community. FINDING: It is suggested that recognizing same-sex domestic partners would serve to reflect the University's commitment to diversity. This issue is noted in the 1993 Report of the Universitywide Campus Community Task Force. SURVEY OF OTHER INSTITUTIONS AND DOMESTIC PARTNER HEALTH BENEFITS A survey was conducted to determine what action other universities, especially UC's comparison eight institutions and other major public research universities, have taken with regard to extending health benefits to the domestic partners of employees. Following is a summary of findings. UC COMPARISON EIGHT INSTITUTIONS *All four private comparison universities (Stanford/MIT/Yale/Harvard) provide access to health insurance benefits to the domestic partners of employees. +Benefits are university-paid, but the amount of the premium is taxable to the employee as imputed income. +Only same-sex domestic partners are eligible for benefits because opposite-sex domestic partners have the option to marry and same-sex domestic partners do not. +Children of the domestic partners are covered by the private universities, except Yale. +An affidavit of domestic partnership is required by all four private universities. +Insurance carriers for Stanford*, MIT, and Harvard did not increase premiums or impose a surcharge. Yale has self insurance health and dental plans. (Health benefit insurance premium costs to the employee are greater at Stanford than UC, especially for two-party and family coverage.) *Currently, only one of the four public comparison universities, the University of Michigan, in the comparison eight set (Illinois/Michigan/SUNY/ Virginia) offers health insurance benefits to the domestic partners of employees. Generally, the states, which control benefits and funding for public universities, do not recognize domestic partners under their eligibility provisions. * The University of Michigan extended health benefits to same-sex domestic partners beginning January 1, 1995. +An affidavit of domestic partnership is required. +All health plans are available to domestic partners. The University of Michigan contributes up to $359.31 per month for each employee, and the employee pays the difference between the amount contributed by the University and the cost of the family/dependent insurance coverage chosen, if it exceeds the University's contribution. +About 80 University of Michigan employees--out of approximately 30,000 employees total--have enrolled their same-sex domestic partners for health benefits (the University had expected about 150 employees to enroll.) +The State of Michigan partially funds health benefits; other sources of funding are student fees and gifts and endowments. +University of Michigan employees are not state employees. +Although it is rumored that the Michigan State Legislature is not happy with the University of Michigan's extension of benefits to domestic partners, the University has no plans to discontinue benefits. OTHER PUBLIC INSTITUTIONS THAT PROVIDE HEALTH INSURANCE BENEFITS TO DOMESTIC PARTNERS: UNIVERSITY OF IOWA AND UNIVERSITY OF MINNESOTA University of Iowa *The university of Iowa is offering domestic partner coverage for a three-year period form 1-1-93 to 12-31-95. *The cost of domestic partner benefits is PAID BY THE EMPLOYEE: the university of Iowa pays the amount it costs for individual employee coverage and the employee pays the additional amount required for the particular type of family coverage that is chosen. *The University of Iowa's self-insured plan is the only plan offered for domestic partner coverage. The coverage is a high-deductible program, which limits the number of employees willing to participate. University of Minnesota *The cost of domestic partner benefits is shared by the employee and the University of Minnesota through a reimbursement plan: the University reimburses the employee for the cost of the domestic partner's own separate health insurance plan up to the amount of the University's contribution for the employees' health plan premium: if the domestic partner does not have a health plan, there is no reimbursement by the University to the employee, nor does the University provide coverage to the domestic partner through the employee. *Prior to offering the reimbursement plan, the University of Minnesota tried to negotiate with the State to include the partners and children of same-sex domestic partners in the State Insurance Plan, but the State would not consider it. BOTH Universities *Both the University of Iowa and the University of Minnesota provide benefits to same-sex domestic partners only. (Iowa is a common-law state, so opposite-sex domestic partnerships are legally recognized.) *Both the University of Iowa and the University of Minnesota cover the children of domestic partners. *Both require an affidavit of domestic partnership. FINDING: Based on the above survey information, the private universities are able to offer health insurance benefits to domestic partners more readily than public universities because their health plans are not State-funded and eligibility requirements for coverage are not governed by respective State statutes, as is the case with the comparison public universities. Currently, no State recognizes domestic partners and therefore domestic partners are not eligible for State-funded coverage. When domestic partner coverage is offered by the private universities, the university contributions vary from partial to full copayment; however, the value of the coverage to the domestic partner provided by the university is taxable (imputed) income to the employee. >From the survey information, it appears that public universities desiring to extend benefits to domestic partners have avoided the issue of public funding by: 1) offering coverage under self-insured plans, and/or 2) requiring employees to pay for the cost of covering domestic partners by paying fo the difference between the cost of individual coverage and family/dependent coverage. REASONS PROVIDED BY UNIVERSITIES FOR EXTENDING BENEFITS TO DOMESTIC PARTNERS *Compliance with Institution's Non-Discrimination Policy regarding Sexual Orientation (Harvard/Michigan/Iowa/Minnesota) *Equity/Equalization of employee benefits (Harvard/Michigan/Iowa/Minnesota) *To Maintain/Increase competitiveness/Others offer coverage (Harvard) *To Acknowledge/Promote Workforce Diversity (Harvard) ESTIMATED COSTS FOR EXTENDING HEALTH BENEFITS TO THE DOMESTIC PARTNERS OF UNIVERSTITY EMPLOYEES University-paid Health Benefits In response to President Peltason's request for information on the estimated costs of implementing UNIVERSITY PAID health benefits coverage to domestic partners and the potential source of funding, the Employee Benefit Programs Office provided the costs for same-sex and opposite-sex domestic partners combined. The Employee Benefit Programs Office indicated that it had no means to accurately break ou costs separately by same-sex and opposite-sex partners. Estimate costs are based on the following factors: Benefits covered: Medical and Dental Population included: UCOP, Campus and Laboratory employees Same-sex and opposite sex domestic partners Active employees and annuitants enrolled in medical Enrollment rates used: 0.58%, 1.5%, and 3.0% of the included population Add'l cost per dp: $161/month (composite cost increase from single party coverage to two-party coverage.) Estimated costs include: UC premium * Administration (documentation, notice, registration, legal analysis Systems (new W-2 or 1099MISC reporting for imputed income, benefits tracking, database modifications) {Administration and Systems expenses are estimates of first-year start up costs.} (*UC's medical and dental carriers no longer require a premium surcharge for enrollment of domestic partners as offered by other employers. However, currently, Prudential only offers coverage for domestic partners with HMO products for other clients. The other HMO's are willing to offer coverage only if all of the University's HMO vendors do so.) Estimated costs---based on 1994 premiums and enrollments (Include annual UC premium and Administration and Systems expenses) Active Employees only Actives and Annuitants (91,500 prime lives) (123,800 prime lives) If 0.58% of eligibles enroll (5.8 employees per 1000) UC premium (annual) $1,200,000 $1,500,000 Administration $ 160,000 $ 220,000 Systems $ 260,000 $ 350,000 TOTAL $1,620,000 $2,070,000 If 1.5% of Eligibles enroll (15 employees per 1000) UC premium (annual) $3,100,000 $4,100,000 Admin $ 160,000 $ 220,000 Systems $ 260,000 $ 350,000 TOTAL $3,520,000 $4,670,000 If 3.0%of Eligibles enroll (30 employees per 1000) UC Premium (annual) $6,200,000 $8,200,000 Admin $ 160,000 $ 220,000 Systems $ 260,000 $ 350,000 TOTAL $6,620,000 $8,770,000 NOTE: According to a study by the University of Michigan, the average enrollment rate for the eight institutions it surveyed (Stanford, Chicago, Harvard, MIT, Columbia, Dartmouth, Iowa State, Univ. of Iowa) was 0.29% (2.9 employees per thousand) for SAME-SEX partners. If this figure is used to calculate the enrollment rate for UC, but doubling it to account for enrollments of opposite-sex partners as well, ** the rate would be 0.58% (5.8 employees per 1000) (**Doubling the rate is simply an approximation for the purposes of this report since the Benefit Programs Office provided combined figures for same-sex and opposite-sex domestic partners because it had no means to accurately break out costs separately for same-sex and opposite-sex partners. Because we cannot at this time determine the actual enrollment rate for opposite-sex domestic partners we have used an estimated equal to the estimated rate for same-sex domestic partners.) EMPLOYEE - PAID HEALTH BENEFITS President Peltason also requested information with regard to EMPLOYEE-PAID benefits. A survey of the University's medical plans indicates that some of the HMOs are willing to offer coverage via a direct-pay (employee-paid) mechanism. However, a requirement of those carriers willing to offer coverage is that all plans do so. The University's largest carrier, Healthnet, will not accept a direct-pay for domestic partners. It will only allow coverage on the same basis as other family members. Other carriers indicate that they have the same policy. Employers who offer such coverage do so onthe same basis as all other covered family members in the plan. The State's small business group pool will only accept enrollments if the employer is making a contribution and all employees are covered in the same manner. FINDING: In its financial impact analysis, the Employee Benefit Programs Office did not draw any conclusions as to the financial feasibility of extending University-paid benefits to domestic partners based on the estimated costs, nor did it provide information on the source of funding. In the absence of further information, it is concluded that the cost of extending University-paid benefits to domestic partners, as estimated by the Employee Benefits Programs Office, may be significant even if more conservative assumptions were utilized regarding participation. However, there is evidence from the experience of other universities that estimated costs may be lower than expected over time. With regard to employee-paid benefits, based on our survey of other institutions' practices, the public universities that extend benefits to domestic partners generally do so at employee expense. This may not be a practical option for the University, given the requirements of health insurance carriers. OTHER AREAS IMPACTED BY A DOMESTIC PARTNERS POLICY Domestic partners are not currently covered by the following University policies, but would need to be considered for coverage if a domestic partners policy were to be implemented: STAFF PERSONNEL POLICIES *Sick-leave--Current personnel policies allow the use of up to 30 days accrued sick leave to provide care for the illness of an employee's spouse; parent; child; sibling; grandparent; grand-child; inlaws or step-relatives in the foregoing relationships; or other related persons residing in the employee's household. *Bereavement Leave--Current personnel policies allow the use of up to 5 days of sick leave due to the death of the employee's spouse; parent; child; sibling; grandparent; grand-child; in-laws or step-relatives in the foregoing relationships; other related persons residing in the employee's household; or any other person to whom the employee has a personal obligation. *Catastrophic Leave Sharing--Certain campuses have catastrophic leave sharing programs allowing the donation of accrued vacation and/or compensatory time off to care for a seriously ill family member. ACADEMIC PERSONNEL POLICIES *Childraising leave--Current policy allows faculty time off the tenure clock to raise a newborn or newly adopted child if they have "primary responsibility. *Sick leave--Current policy allows faculty time off the tenure clock for sick leave. REAL ESTATE MANAGEMENT & LOAN PROGRAMS POLICIES *Loan Programs--Under the University loan programs, UC's survivorship rights policy allows only a spouse to continue to participate in the loan in the event of the death of the "eligible borrower" (ie, faculty member or Executive Program member.) *Campus Housing--some campus for-sale housing projects distinguish between spouses and others in determining how long a survivor can remain in a unit after the death of the "eligible party" (ie, faculty member or Executive Program member) to the transaction. Note on recognition of Income As required by Federal law and regulation regarding the extension of credit, the University recognizes the income of all co-borrowers, whether or not they are married. STUDENT FAMILY HOUSING The university provides housing for married students and students with minor dependent children on all nine campuses. Students eligible for student family housing include those who are married, with or without children, and those who are single parents with children. Campuses have written policies that define eligibility requirements and priorities for making housing assignments. All campuses require students to provide legal documentation to verify their eligibility for married and/or family housing. In the interest of accommodating students whose circumstances are not described by these criteria, the University is studying other possible eligibility requirements. The results of this study will be available within the next few months. ADDITIONAL HEALTH AND WELFARE BENEFITS In addition to medical and dental coverage, the following health and welfare benefits could also be impacted by a domestic partners policy: *Optical Services Plan--currently an employees legal spouse and eligible children may be covered *Life insurance--currently employees can purchase coverage only for themselves, their legal spouses, and their eligible children. State regulations may limit flexibility in this area. *Accidental Death and Dismemberment (AD&D) coverage--currently employees can purchase coverage only for themselves, their legal spouses, and their eligible children. *UCRP Automatic Survivor Benefits ================================================================= John J. Winters, SBMW, Smyth-Fernwald straight Family Housing 2939 Dwight Way, Berkeley, CA 94720. Campus MC #2294 510-642-3653 Work;