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Benefits for the Domestic Partners of Gay and Lesbian Employees at
Lotus Development Corporation

by Catherine Iannuzzo Alexandra Pinck

Simmons College Graduate School of Management November, 1991

@ copyright Catherine Iannuzzo and Alex Pinck, 1991

Introduction

It is 1991 and health care costs are out of control.  As a result,
health insurance costs are skyrocketing and corporations are
restructuring employee benefit plans to reduce corporate costs.
The AIDS epidemic rages in an atmosphere of fear, public hysteria,
and government neglect.  In the midst of this environment, Lotus
Development Corporation announces the extension of health care and
other benefits to the "spousal equivalents" of gay and lesbian
employees.  Why?

Ultimately, the answer is simple: "We did this because we felt it
was fair and equitable," said Russell Campanello, Vice President
of Human Resources at Lotus.  This decision by Lotus is a bold
step that recognizes some of the realities of American family life
in the twentieth century and demonstrates a willingness to accept
and validate the diversity of its employees.  In leading the way
with this decision, Lotus had to struggle with many tough issues.
The cost of such a program, the fear of AIDS, and the possible
business backlash were all concerns that had to be addressed.

Corporate Values

Based in Cambridge, Massachusetts, Lotus Development Corporation
is one of the world's leading independent software companies.
They are best known for creating 1-2-3, the popular spreadsheet
program that was largely responsible for making the IBM personal
computer such a success.  Lotus was founded in 1981 and has grown
since then to a corporation of 3,100 employees, with revenues of
$556 million in fiscal year 1989.

The new policy decision by Lotus is grounded in a tradition of
corporate values that reaches back to the founding of the company.
>From the beginning, Lotus's policy of equal employment opportunity
has included non-discrimination on the basis of sexual
orientation.  This is part of an overall attitude that as a
high-technology company, Lotus's chief wealth lies in its
"intellectual capital".  Creating an environment in which
employees of all genders, ethnicities and cultural backgrounds can
work together for a company that they feel is "worthy of their
extra effort" is a important principle at Lotus.  They are proud
of being among the top 100 companies for women   and have recently
submitted their data to be considered for a similar honor from
Black Enterprise magazine.  Lotus  hopes to see itself as the
"employer of choice" for talented people of every description.

Lotus sees valuing the diversity of its employees as making good
business sense for the company.  "Our point in all of this is that
there is a return for being able to attract and retain the best
people that you can," Mr. Campanello says.  "Lotus is a place
where you have to treat people well.  You cannot just turn up a
bunch of dials or throw more things down a chute to increase
productivity.  You have to treat people in the light of what their
values are."

In 1989 a group of gay and lesbian employees at Lotus decided it
was time that the company represented their values more fully.
Polly Laurelchild, AnnD Canavan, and Margie Bleichman prepared a
proposal for extending benefits to domestic partners.  The
proposal presented the issue as a matter of equal compensation.
Since benefits can be as much as 40% of an employee's total
compensation in a modern corporation,  gay and lesbian employees
as a group were being categorically denied the same level of
compensation as other employees.  In the light of Lotus's values
of non-discrimination, such a denial was unfair, discriminatory,
and contrary to company policy.  The process of recognizing gay
and lesbian family relationships was set in motion.  Defining the
Family

Now that the "traditional" American family (two married parents
and their children) accounts for only 27% of American households,
Americans seem to be adopting a looser definition of family.
Legal institutions are usually slow to adapt to social
developments, but even the courts are recognizing changing
realities.  In Braschi v. Stahl Associated the New York State
Supreme Court recently ruled that the longtime companion of a
deceased tenant could not be evicted from the rent-controlled
apartment the gay couple had shared for 11 years.  Judge Vito
Titone wrote that protection from eviction "should not rest on
fictitious legal grounds or genetic history but instead should
find its foundation in the reality of family life."

Where to draw the line around what constituted a family for
benefit purposes was one of the first questions that Lotus needed
to answer.  The lesbian task force that presented the proposal
thought that all employees should  have the option of extending
benefit coverage to any significant person in their lives.  This
method is certainly the most flexible and least judgemental view
of "family,"  but fears of employees nominating their sickest
friend made it completely impractical.  The proposal was quickly
defined in terms of "spousal equivalents" and much internal debate
followed on whether unmarried heterosexual couples should be
covered along with homosexual couples.

The corporation decided that the goal was to provide equitable
compensation to homosexual employees.  Heterosexual couples that
want family benefits have the ability to obtain them through
marriage.  Because they do have this choice, Lotus did not feel
that domestic partner coverage was necessary for heterosexual
couples.  Legally recognized marriage between members of the same
sex is not available anywhere in the United States.   Because of
this, Lotus decided that they could achieve parity for homosexuals
by creating an equivalent avenue for claiming family benefits.  If
the State of Massachusetts (where Lotus is based) were to
recognize same-sex marriages, this policy would no longer be
considered necessary for its Massachusetts employees.

The policy covers the same-sex "spousal equivalents" of employees
as well as the children of either partner.  Spousal equivalency is
rigorously defined as an exclusive relationship in which the
partners share a residence and financial obligations and intend to
do so indefinitely.  The relationship is attested by an affidavit
which must be filed with the Human Resources Department.

Lotus has taken an essentially conservative position on "family,"
although including gay and lesbian partners in the definition is
very progressive.  Applying computer industry terms to the policy,
Ms.  Laurelchild says, "it has the look and feel of marriage."
Not all gay activists think that emulating conventional marriage
is the most desirable thing for the gay and lesbian community.
Some view life on the outside of acceptable society as an
opportunity to create new kinds of meaningful relationships and
explore new territory in human possibility.   The Lotus policy
does not address any of these adventurous alternatives.

Some unmarried heterosexual couples object that they are not
included in the policy.  Ironically, it was the lesbian activists
that argued most strongly for including them.  It is the gay and
lesbian movement that has taken the risks and pushed most
aggressively for recognition of domestic partners, but it is
overwhelmingly heterosexuals that have taken advantage of the
benefits when they have been offered.

Benefits for heterosexual couples is not the same thing as
benefits for homosexual couples.  Homosexuals have no other
option.  Without recognition of domestic partners, their
relationships are institutionally invisible.  If they choose to
exercise it, heterosexuals have the option of marrying and
acquiring an enormous amount of institutional support and
recognition of their relationship.  Choosing not to be married is
not the same thing as not being able to marry.  Lotus's decision
has made the distinction very clear, and in doing so they have
been brave enough not to hide equity for gay and lesbian people
under a blanket of generic domestic partnerships.  Cost and
Feasibility

"This is not a money issue, it is a moral issue," said Mr.
Campanello.  "The cost issue should be off the table for a lot of
reasons."  Nevertheless, in a time where containing costs is the
primary directive of many human resource managers, cost loomed as
one of the major concerns.  Health insurance is not the only
benefit covered by the policy, but it is by far the most
expensive.  Although it is the first Fortune-500 corporation to do
so, Lotus is not the first entity to institute coverage of
domestic partners. In order to assess the possible impact of
insurance costs, Lotus investigated the experiences of other
groups with this type of coverage.

Perhaps because they are more directly subject to public pressure
through legislation, municipalities have been significant leaders
in providing benefits to domestic partners.  These range from very
low cost benefits like bereavement leave to full-scale health
insurance.  The cities of Seattle, West Hollywood, Berkeley, Santa
Cruz, and Laguna Beach all have health benefits for domestic
partners of city employees.   Appendix A gives a more detailed
list of municipalities with insurance coverage for domestic
partners.

In the private sector, there are several organizations that have
been quietly providing domestic partnership coverage for many
years.  As a result of union negotiations, The Village Voice
newspaper has been covering spousal equivalents since 1982.  The
American Psychological Association and ACLU/San Francisco have
both covered spousal equivalents since 1983.  The American Friends
Service Committee has had these benefits since 1987, and Ben and
Jerry's Homemade, Inc., the Vermont-based ice cream company,
instituted them in 1989.  Appendix B gives a listing of some
private organizations offering domestic partnership benefits.

Use of Benefits

The experience of both public and private organzations has been
similar with regard to employee use of the benefits.  These groups
all offer domestic partnership coverage to both heterosexual and
homosexual couples, with heterosexuals far outweighing homosexuals
in signing up for these benefits.  In 1989 the City of Berkeley,
California had 1,550 employees, of which 110 took advantage of
domestic partnership coverage.  Only 23 of these employees were
covering same-sex partners .  Six of the 125 employees of the City
of West Hollywood enrolled domestic partners.  Most of the
partners are heterosexual,   even though 40% of the employees
identify as homosexual.   Of 650 employees in Santa Cruz, 30 have
signed up for domestic partner benefits and only one is a same-sex
couple.   In Laguna Beach, two heterosexual couples out of the 560
employees enrolled a domestic partner.   Since instituting
domestic partner coverage for its 10,000 employees in April, 1990,
the City of Seattle has registered 361 affidavits of domestic
partnership, about one-third of them from homosexual couples.  Of
these, 172 partners are enrolled in medical plans and 187 in
dental.  Of the children of domestic partners, 20 are enrolled in
medical plans and 29 in dental.

Private organizations have been no different from municipal ones
in their experience.  In 1991, The Village Voice reported 18
couples were enrolled, five of them same-sex.   The American
Psychological Association's 1,500-member plan has 10 couples using
the benefit, five of them gay or lesbian.   At Ben and Jerry's, 15
of its 300 employees have enrolled domestic partners, only one of
which is a same- sex couple.   The American Friends Service
Committee reports only five of its 350 employees use their
domestic partner benefit.

So far, Lotus's experience has been consistent with these numbers.
Since announcing its policy in September 1991, only twelve of its
3,100 employees have signed up for domestic partner benefits.
This is only 6% of an estimated population of 310 gay or lesbian
employees.

The reasons why few people make use of the benefits vary.
Domestic partners are often employed and are covered by their own
benefits.  Gay and lesbian people are still frequently reluctant
to identify themselves, even though the affidavits are
confidential.  The definition of a "spousal equivalent" is very
close to conventional marriage and not all relationships come
within those guidelines.  All of these factors taken together
indicate that fear of being flooded by uninsured gay partners is
simply not justified.

Catastrophic Claims

Because gay men in the United States have been hard-hit by the
AIDS epidemic, fear of catastrophic claims due to AIDS often
motivates those opposed to insurance of homosexual partners.
Assertions that such coverage will be prohibitively expensive are
common.  In reality, it is probably more expensive to cover female
heterosexual spouses.  Maternity costs are among the biggest
budget items in many insurance pools, but no one has seriously
proposed eliminating dependent wives from eligibility.
Homosexuals are the only group for whom cost is considered to
justify discrimination.

The experience to date does not indicate any increase in
catastrophic claims due to domestic partnership coverage.  The
City of West Hollywood's medical plan has only been in effect
since the beginning of 1989, but so far domestic partner claims
are much lower than the group average.    Claims for domestic
partners in the City of Seattle's indemnity plan have also been
better than that for spouses.  After almost ten years of coverage,
Jeffrey Weinstein, an editor of The Village Voice and shop steward
of UAW Local 65, reports that "We've had no problem with either
the administration of the plan or excessive claims on the plan."
According to Milt Freudenheim of the New York Times, the American
Psychological Association, the American Friends Service Committee,
and ACLU/San Francisco have all reported no change in rates, risk,
or expense over ordinary spousal coverage.    Of 17 health benefit
plans examined by the Bureau of National Affairs (BNA), not one
has ever had an AIDS-related claim filed by a partner of an
employee.

The final report prepared by San Francisco's Mayor's Task Force on
Family Policy concludes that cases of AIDS among domestic partners
are eventually inevitable.  Using a fairly pessimistic
methodology, they predicted 18 new cases of AIDS each year among
the 2,104 domestic partners that would be enrolled in their
proposed coverage.  It was predicted that 38 of these partners
would probably be taking AZT (a very expensive drug used to treat
AIDS) at any one time.  The average total health care costs of a
person following an AIDS diagnosis is estimated at $50,000
(considerably less than the expense of illnesses such as heart
disease or cancer).  The cost of AZT maintenance for HIV+
individuals is placed at $112,800 for all domestic partners in all
plans for a year.  Spreading these costs evenly over 31,000 active
city employees, the estimated HIV-related costs for domestic
partners amounted to $2.71 per employee per month.  These costs
are not extreme even when based on pessimistic assumptions about
the population of one of the American cities hardest hit by the
epidemic.

The City of Berkeley began providing benefits to domestic partners
through its own indemnity plan in 1985, the first city in the
United States to do so.  Because of the lack of statistical data
for domestic partners, the Kaiser Permanente and HEALS HMO plans
that are also offered by the city delayed coverage until 1987, and
would extend it only if an additional 2% "rate loading" was added
to the normal premiums.  This surcharge was discontinued in 1989,
after four years of domestic partner coverage without any claims
for AIDS or other catastrophic illness, although one heterosexual
couple did have a $300,000 baby.

Sally Fox, the benefits manager for the City of Seattle, says,
"People kept telling us to worry about AIDS, but AIDS is not the
highest ticket item on our medical.  Our biggest ticket items are
high-risk pregnancies and C-sections."   The relatively low rate
of childbirth among homosexual couples might be considered a
significant cost advantage to this population.

The lack of statistics is often used by insurers as justification
for refusing coverage or demanding wild surcharges.  However, as
Mr. Campanello of Lotus points out, "these people are already in
the numbers".  With 10% of the American population commonly
estimated as homosexual,  a significant number of people already
in the actuarial tables of every population group are in fact
partners in homosexual relationships.  The 1990 census collected
information on same-sex couples for the first time in history and
census officials estimate that 1.6 million of the nation's 91
million households involve couples of the same sex.

The fear of disastrous costs that is raised in any discussion of
benefits for gay and lesbian partners is largely the result of
misinformed hysteria about AIDS.  In his lifetime, a person with
AIDS is likely to cost as much to treat as a single coronary.
Although the drugs can be expensive, the disease does not usually
involve intensive hospitalization or expensive procedures.  The
cost of AIDS is overestimated, and the likely incidence of it
among the pool of domestic partners is overestimated, too.

The focus on AIDS ignores the fact that lesbians are half of the
homosexual population and may even represent a larger percentage
of those who use the benefits.  Group Health Cooperative of Puget
Sound, one of the HMOs that insures the City of Seattle, reports
that 75% of the same-sex couples in their program are women.
Lesbians as a group have one of the lowest incidence of AIDS.

As an issue, cost should indeed be "off the table."  Even if one
could morally justify excluding a group of people from coverage
because of cost, in fact gay partners cost no more than
heterosexual spouses and may even cost less.  Fraud and Abuse

Concern about fraudent claims or abuses of the system are common
fears about domestic partnerships.  Like many other fears, this
one does not seem to be based on experience.  None of the 17
health plans reported on by the Bureau of National Affairs
reported any cases of abuse among domestic partners.  Indeed, many
studies have pointed out that heterosexuals claiming to be married
are not usually required to submit any proof of that fact.  There
are doubtless many cases of unmarried heterosexual couples
claiming to be married for the sake of insurance benefits.
Heterosexual marriages on paper for the sake of immigration,
insurance, and other benefits are certainly not unknown.  The
stigma often attached to homosexual relationships is in sharp
contrast to the social respectability of marriage; homosexual
"marriages of convenience" would not seem to be a very major
threat.  The study conducted by the City of Seattle concluded that
"the financial benefits to be gained would not begin to outweigh
the emotional deterrent" for many homosexual couples.

Many insurers fear that homosexuals will sign up their sickest,
uninsured neighbor or friend as a domestic partner for the sake of
providing them insurance coverage.  As a result, many plans
covering domestic partners have even more stringent requirements
for partner status than they do for marriage.  The Village Voice
is typical in requiring a notarized affidavit and a one year
waiting period.  Jeffrey Weinstein says, "There has been
remarkably little partner switching, and most of them have been
the heterosexuals.  We have not had one single problem from
domestic partner coverage."

On the other hand, Ben and Jerry's decided against requiring
either affidavits or a waiting period.  It was the recommendation
of their insurer, Consumers United Insurance Company, that
employees could be trusted to designate only committed, long-term
partners.  Consumers United is one of the few insurance companies
with experience covering domestic partners.

Fear of a constantly changing dependent pool is another chief
objection of insurance carriers.  "Our greatest concern is the
frequency of change from one domestic partner to another," says
Mary O'Keefe, a spokesperson for Principal Financial Group in Des
Moines, Iowa.  "It is very difficult for our actuaries to figure a
group's risk if the pool of dependents keeps changing."   Because
homosexual relationships are not regulated by the state, it is a
common belief that they are inherently more unstable than
heterosexual marriages.  One study has found that 60% of lesbians
and 40% of gay men are in long-term relationships.   Another found
that many homosexual couples lead stable lives, some being
considerably happier and better adjusted than heterosexuals as a
whole.   An informal survey of its readership by OUT/LOOK magazine
found 400 couples reporting that their relationships averaged
seven years in duration for men and five years for women.   The
median longevity of a heterosexual marriage is seven years.   The
experience of groups like The Village Voice would seem to indicate
that a homosexual lifestyle of revolving partners is another
myth.

Lotus opted for a signed affidavit as the equivalent of a marriage
certificate for homosexual relationships.  They stress that such
an affidavit is a legal document that could have implications for
community property in a "palimony" suit, giving it some of the
weight of marriage in financial terms.  There is no waiting
period, since married spouses are covered immediately.  In dealing
with the termination of relationships, Lotus decided to draw as
close a parallel to divorce as possible.  An employee can file for
termination, with a 31-day waiting period in which to reverse the
decision.  At this point the partner is notified and offered the
option of continuing benefits under COBRA.  A typical no-fault
divorce in the state of Massachusetts takes about one year to be
final, so a one year waiting period was instituted before a new
partnership could be covered.

Exhibit 2 shows a copy of the affidavit used by Lotus for
declaring spousal equivalency.  This affidavit requires that
spousal equivalents live together in the same residence -- a
requirement not shared by married couples.  By setting a very
distinct set of guidelines for recognized domestic partners, Lotus
has effectively addressed the anxiety insurance experts have that
a domestic partner could be "anyone the employee knows who needs
health insurance." Structuring Insurance

Insurance companies have been resistant to the idea of insuring
domestic partners.  As Diane Cotting, president of D.C. Cotting
Co., an employee benefits consulting firm, states, "With the
rising cost of health care in this country, insurance companies
are reluctant to accept any risk that could affect their bottom
line."  Statistical unknowns are naturally full of terror to
insurers and it would be highly unrealistic to imagine that bias
has not been a factor.  Finding an insurer willing to provide this
kind of coverage has been one of the biggest roadblocks to
coverage for most of the groups seeking to implement domestic
partnership benefits.  The City of West Hollywood was turned down
by 18 insurers when it sought these benefits.  The city finally
chose to insure itself.  Combining a flexible benefits plan with
the domestic partner benefits,  the city put together an even
richer benefits package than it had before.  Costs in the first
half of 1989 dropped to $35,000 from the estimated $100,000 the
city would have paid its commercial carrier for less benefits.
In this case, the intractability of insurance companies saved the
city money.

Like the City of West Hollywood, many of the groups offering
domestic partner coverage are self- insured.  There are only a few
insurance companies offering such insurance, but as the actuarial
base grows, this list is likely to grow.  The American
Psychological Association's domestic partner benefits have been
underwritten by the Liberty Mutual Insurance Company.  The APA is
the only group to which Liberty Mutual currently provides this
coverage, but according to Lambda they consider this coverage a
"successful experiment" and would be willing to consider doing it
again.  The American Friends Service Committee insures its 350
employees through the Independence Blue Cross Association in
Philadelphia and the John Hancock Life Insurance Company, but both
of these companies claim this is a unique circumstance.  The
leader in underwriting domesic partnership plans is Consumer's
United Insurance Company, which offers three such plans.  One of
their largest commercial clients is Ben and Jerry's.  Appendix C
lists the insurance companies that have underwritten plans for
domestic partners and Appendix D lists other resources from which
more information about insurance coverage may be obtained.

Lotus Development Corporation has a self-insured plan
(administered by Employee Benefit Plans Administrators) which gave
the company considerable flexibility to extend coverage as it
chose.  Lotus's own plan has a liability of $140,000 per employee,
with claims over this limit covered by a stop-loss carrier.  Lotus
also offers an HMO option, which has been selected by
approximately 10% of its total workforce.

Negotiations with the stop-loss carrier were a significant part of
implementing the policy.  Lotus was committed to offering the
coverage only through its own plan if necessary, although the
difference in coverage limits would be clearly discriminatory.
Eventually, the Lotus researchers were able to obtain anecdotal
data from an insurance company that had been quietly providing
this coverage for a number of years.  This, plus data that shows
the relative cost of AIDS to be well within Lotus's own plan
limit,  was enough to convince the insurance carrier that Lotus,
rather than the carrier, would probably end up with the burden of
any AIDS cases.  This alleviated the carrier's greatest fear,
therefore encouraging them to take the risk.

The HMO had additional concerns about adverse selection.  HMOs are
legally restricted from imposing any clauses on pre-existing
conditions so the fear of being selected by clients in the
greatest need of services is understandable. Most of the HMOs
providing domestic partnership coverage around the country have
responded to adverse selection by adjusting their rates upward by
one or two percent.  The HMOs with the longest experience covering
domesic partners, the Kaiser Permanente and the HEALS plan,
dropped their rates after four years of satisfactory claim
experience.  Other HMOs taking the plunge for the first time seem
to prefer to amass their own claims experience.   The HMO working
with Lotus eventually decided to provide the coverage.  They
adjusted Lotus's rate to account for the unknown risk, much like
other HMOs when first faced with this new dependent pool.

In total, Lotus is paying about $30,000 in annual premiums for the
twelve spousal equivalents currently registered.

Because it is the nature of their business to be conservative and
avoid risk, insurance companies are the biggest hurdle in
developing plans for domestic partner benefits.  The hurdle is not
insurmountable, but requires dedication and creativity on the part
of employers.  Self-insured employers have a great advantage in
this area, and as the City of West Hollywood proved,
self-insurance can end up being the best solution for everyone.
Tax Implications

The City of Seattle was the first employer to seek an IRS ruling
about the tax status of its domestic partner benefits.  At the
time that the city was conducting its investigation, Section 89 of
the tax code raised the possibility that all employee benefits
might be taxable if any of them were paid to domestic partners.
This statute was eventually repealed in the fall of 1989.

In May, 1990 the IRS returned a ruling to the city deciding that
all benefits provided to domestic partners are taxable as income,
unless the partner is recognized as a common-law spouse by the
state or can qualify as a dependent under the tax code.  To the
IRS, a dependent is defined as someone who depends on the employee
for more than half his or her income.  Though this is a private
ruling, not intended as a precedent, it is a good indication of
the view the IRS is likely to take in other situations.  In May,
1990 the IRS required that these benefits be taxed at market rate,
but in December, 1990 they revised that ruling and decided that
the benefits could be taxed at the group rate.

So as not to endanger the tax status of their other plans, Lotus
created a separate insurance plan for domestic partners.  The
employee contribution is deducted after taxes.  At the end of the
year, the value of the group rate premium paid by Lotus is added
as taxable income to the employee's W2 form.  The participating
employees are paying about $1,350 in taxes on the $30,000 total
value of the benefit premiums.  The Public Response

When Lotus announced its new policy on September 3, 1991, the news
clearly touched a public nerve.  All the major news media picked
up on the story.  Russell Campanello, Polly Laurelchild, AnnD
Canavan, and Margie Bleichman found themselves momentary media
stars.  In various combinations, they found themselves on ABC's
Good Morning, America, Cable News Network, National Public Radio,
CBS radio, and the Boston-area Channel 7.  They were interviewed
in feature articles in Business Week and The Wall Street Journal.
Copies of the announcement flew around the electronic networks
that connect most high-technology companies.  The story was
reported around the world and letters came in from England,
Belgium, and Australia.

Lotus crafted their policy with the intention of serving as a role
model to other companies.  They were prepared for a response, but
not quite prepared for the national and international attention.
Shareholders, customers, and complete strangers contacted Lotus,
often with strong statements to make.  Some sent back shredded
software disks to express their displeasure.  Mr. Campanello
received at least one threatening phone call from someone wanting
to "teach him a lesson."  Although the homophobic responses were
sometimes intimidating, 80% of all the feedback Lotus has received
have been positive expressions of support and commendation.
Customers like the one that promised to discourage clients from
investing in a company that "hires queers" were more than offset
by customers like the computer chain salesman who said, "I
represent a number of products and it gives me great pleasure to
represent yours, because I know the values your company stands
for."

The Lotus employees who were the focus of this attention can all
tell very positive and uplifting stories about the responses they
have received.  After one article was published, Ms. Laurelchild
received a telephone call from a representative of a west coast
company.  He reported that they had been in the process of
evaluating software from Lotus and one of its competitors for
purchase by their company.  After reading the article,  the
company selected Lotus's product "because we like your values."
Mr.  Campanello has another anecdote about an executive for a
large, midwestern financial institution.  The executive felt the
need to remain anonymous and shut the door of his office in order
to make the phone call.  He told Mr. Campanello, "I have been in
the closet all my life, but I can't tell you how great it was to
hear your company do this.  It means there is hope.  I have a say
in what kind of products we buy, and rest assured that I will be
advocating for your company." Employee reactions

A few weeks after the policy announcement was made, Lotus held an
employee information meeting to discuss it.  About 60 employees
attended.  A few were quite vocally opposed to the policy, but the
vast majority were overwhelmingly positive and supportive.  Ms.
Laurelchild recalls being very touched by married, heterosexual
employees making statements like "this has made me the proudest I
have ever been to work for this company."

Lotus recognizes that for some people, accepting the homosexuality
of others is a difficult task.  Mr.  Campanello is realistic about
this.  "This policy is not perfect.  The hope is that the
structure actually creates some change.  What we put through was a
stake in the ground around our willingness to value dimensions,
every dimension."  These issues will continue to be dealt with in
an ongoing way through the company's diversity training, which
gives employees the opportunity to discuss their differences
openly, ask questions, and confront their own prejudices and
discomforts.

The Future

How has the Lotus policy shaped the future for employers and
insurers?  The company's hope to be model for others seems well on
its way to fulfillment.  Since the announcement, over 80 companies
have contacted the Human Resources Department at Lotus to find out
how they can do the same thing.  Three gay and lesbian employee
groups have contacted the women at Lotus who started the process
to find out how they can start the same change in their companies.
Because of the electronic information network, the announcement
has had an especially big impact on high-technology companies.
Members of Silicon Valley High-Tech Gays, an employee group in one
of the major high-technology regions of the country,  have begun
to organize quite vigorously to get this benefit in their own
companies.

Sue van Hattum works for the Institute for Global Communications,
a small, progressive non-profit organization.  She heard about the
policy through one of the electronic mail networks and brought the
information to her executive director.  They now have partner
benefits written into their affirmative action policy.
Implementation will be a matter of time, but without Lotus proving
that it was possible it would never have happened.

Denise Hurley, a member of the Committee for Valuing Differences
at Digital Equipment Corporation's Marlboro site, says that many
people have been asking, "If Lotus can do it, why can't we?"
Digital prides itself on its own "valuing differences" philosophy
and has had an active gay and lesbian policy committee for years.
Although Digital has been hard pressed financially over the last
year, Denise says, "There has been lots of support and talk about
the business issues.  It makes good business sense to keep good
people here.  We are really looking at it, and I think it may
happen soon."

Although the process of bringing this policy to fruition took
Lotus two years, Mr. Campanello says that implemention could be
complete in about six months "if the corporate values are there."
As a trailblazer, Lotus had to spend a lot of time on research and
resolving its own internal conflicts about some individuals'
commitments to valuing its gay and lesbian population.  Education
has taken time.  When the proposal was first presented to a group
of senior managers (all married men), one of them couldn't
understand why anyone would need such a thing.  The invisibility
of gay lives, a well-learned survival strategy for an
often-persecuted people, takes courage to overcome.  A willingness
to take risks is required on all sides.

Not one of the least groups being asked to take risks is the
insurance industry.  A survey by the International Foundation of
Employee Benefit Plans found that 30% of the benefits specialists
expected coverage of domestic partners to increase among
employers.   Tom Revis, the general sales director for Group
Health Cooperative of Puget Sound (one of the HMOs covering the
domestic partners of Seattle city employees), has said, "This is
uncharted ground.  But I do think it is the wave of the future."
Nevertheless, insurance companies seem to prefer that someone else
be the first to explore this new territory.  Ms. Cotting praises
Lotus for making "a move towards breaking the barriers of
discrimination in the workplace", but emphasizes that their level
of self-insurance puts the burden of risk on the company, rather
than the insurance carrier.  She sees little change in insurance
industry practices unless "companies are forced through public
pressure or legislation to accept the perceived health risk of
domestic partners."  It may be up to organizations with the moral
commitment to accept this burden to lead the way.  Conclusion

Lotus did not make its decision for business or financial reasons,
but because it was the right thing to do.  It has a set of
corporate values that make recognizing the different human
dimensions of its employees a priority.  The objections usually
raised about cost and catastrophic AIDS claims have been shown to
be completely unjustified in experience.  By defining a procedure
and criteria for recognition of a domestic partner relationship,
Lotus avoids rampant abuse of the system.  Lotus has proven that
obtaining insurance is not an insurmountable obstacle.  Insuring
themselves gives Lotus great flexibility, and as the data
accumulate even other insurance companies can be persuaded that
the risk is manageable.  As part of a discriminatory legal
machine, the IRS imposes restrictions, but Lotus has managed these
effectively.  Although the policy is controversial for some, the
overwhelming majority of customers, employees, and the general
public are understanding and supportive.

The Lotus policy directly affects very few people, but as a symbol
it is very significant.  Benefits for gay and lesbian partners is
not an issue of cost or insurability, as we have shown.  It is an
issue of values.  No one denies that families are the basic unit
of human welfare in society.  The question is whether the families
of gay and lesbian people are valued like other families, and
whether their lives count as much as other lives.  Lotus has said
that they do.  In recognizing the lives of its gay and lesbian
employees, Lotus has created a safer and more welcoming workplace.
This can only benefit Lotus in its search for "the best and
brightest" that will make it successful in the complex and diverse
world of the next millenium.

Appendix A

Cities that have enacted domestic partnership legislation to
provide health benefits as of October, 1990.  The list does not
include cities that offer other benefits (sick/bereavement leave,
registration ) but do not offer health coverage.

West Hollywood, CA      Feb. 1985       health benefits contact:
sick/bereavement leave Kevin Fridlington, Personnel Dept.
registration (provides hospital/jail visitation) 8611 Santa Monica
Blvd.  West Hollywood, CA 90069 (213) 854-7305

Berkeley, CA    Apr. 1985       health benefits contact:
sick/bereavement leave Steve Replogle, City Manager's Office
Martin Luther King, Jr. Civic Center Bldg.  2180 Milvia Street,
5th floor Berkeley, CA 94704 (415) 644-6580

Santa Cruz, CA  May 1986        health benefits contact:
sick/bereavement leave Erwin Young, Director, Personnel Dept.  337
Locust Street Santa Cruz, CA 95060 (408) 429-3685

Seattle, WA     Mar. 1990       health benefits contact:
Sep. 1989       sick/bereavement leave Everett Rosmith, Personnel
Director Dexter Horton Bldg, 4th floor 710 Second Avenue Seattle,
WA 98104 (206) 684-7888

Laguna Beach, CA        Jun. 1990       health benefits to city
employees contact:                (not legislation, City Council
policy) Robert Gentry, City Councilmember 505 Forest Avenue
Laguna, Beach, CA 92651 (714) 856-7758

Ithaca, NY      Aug. 1990       registration contact:
benefits under consideration Pat Kennedy, City Staff Attorney City
Hall, 108 E. Green Street Ithaca, NY 14850

courtesy Lambda Legal Defense and Education Fund

Appendix B

Sample of private organizations that offer domestic partnership
benefits

Lambda Legal Defense and Education Fund 666 Broadway New York, NY
10012 (212) 995-8585

The Village Voice (since July, 1982) 842 Broadway New York, NY
10003 (215) 241-7107

American Friends Service Committee (since 1987) 1501 Cherry St.
Philadelphia, PA 19102 (215) 241-7107

National Organization for Women 1000 16th Str., N.W., Suite 700
Washington, DC 20036 (202) 331-0066

American Psychology Association (since October, 1984) 1200 17th
St., N.W.  Washington, DC 20036 (202) 955-7600

ACLU/San Francisco (since 1983) Mission St.  San Francisco, CA
(415) 621-2488

Seattle Mental Health Institute 1600 E. Olive St.  Seattle, WA
98122 (206) 281-4300

Country Transit District (public transportation for Santa Cruz)
P.O. Box 1742 Santa Cruz, CA 95601 (408) 426-6143

Albert Einstein College of Medicine / Montefiore Medical Center
Belfer Building, Room 501 1300 Morris Park Avenue Bronx, NY 10461
(212) 430-3583

courtesy Lambda Legal Defense and Education Fund

Appendix C

Insurance companies that have underwritten plans for domestic
partners

Consumer's United Marketing Department 2100 M Street, N.W.
Washington, DC 20037 (202) 872-5213

Liberty Mutual Insurance Attn: Special Risks Group Insurance
Department 175 Berkeley Street Boston, MA 02117 (617) 357-9500

APA Insurance Trust 888 17th Street, N.W.  Washington, DC 20006
(202) 955-7780

John Hancock Mutual Life
1 Hancock Place Boston, MA 02217 (800) 922-5050

Independent Blue Cross 1333 Chestnut Street Philadelphia, PA 19107
(215) 564-2100

courtesy Lambda Legal Defense and Education Fund

Appendix D

Resources for information about insurance coverage and plans
currently in operation

Lambda Legal Defense and Education Fund 666 Broadway, 12th Floor
New York, NY 10012 (212) 995-8585

National Center for Lesbian Rights 1370 Mission Street, 4th Floor
San Francisco, CA 94103 (415) 621-0674

Berkeley City Manager's Office Steve Replogle
2180 Mivia Street, 5th Floor Berkeley, CA 94704 (415) 644-6580

Madison Institute for Social Legislation 953 Jenifer Street
Madison, WI 53703 (608) 244-3345

National Organization for Women 1401 New York Avenue, N.W., Suite
800 Washington, DC 20005 (202) 347-2279

Office of Intergovernmental Relations 1350 Pennsylvania Avenue,
N.W.  Washington, DC 20014 (202) 727-5829

City of West Hollywood Personnel Department 7377 Santa Monica
Boulevard West Hollywood, CA 90046 (213) 854-7494

Village Voice 842 Broadway New York, NY 10003 (212) 475-3300

courtesy Lambda Legal Defense and Education Fund

Bibliography

Blumenfeld, Warren J.  and Raymond, Diane, Looking at Gay and
Lesbian Life, Boston: Beacon Press, 1989.

Celis III, William, "Benefits for Live-In Mates of Workers Face
Obstacles", "The Wall Street Journal," July 25, 1989.

Dinan, Jim  and Beecken,  Tom, "Covering Domestic Partners," HMO
Magazine, September/October 1991.

District of Columbia Commission on Domestic Partnership Benefits
for D.C. Government Employees, "Final Report and Recommendations,"
Washington, D.C., July,1990.

Freudenheim, Milt, "Rising Worry on 'Partner' Benefits," The New
York Times, August 16, 1989.

Hammonds, Keith H., "Lotus Opens a Door for Gay Partners,"
Business Week, November 4, 1991.

Isaacson, Walter, "Should Gays Have Marriage Rights?," Time,
November 20, 1989.

McDonald, Martha, "Domestic partner benefits changes," Business &
Health, October 1990.

National Center for Lesbian Rights, "Changing Family Policy," NCLR
Newsletter, Fall/Winter 1990.

Rule, Sheila, "Rights for Gay Couples in Denmark," New York Times,
October 2, 1989.

Sit, Mary, "The best workplaces for women," The Boston Globe,
September 6, 1988.

Sorge, Rod, "Gay couples defined as 'family'," Gay Community News,
July 16, 1989.

Stoddard, Tom and Ettelbrick, Paula, "Legalizing Gay
Marriage,"OUT/LOOK, Fall 1989, Vol. 6.

Wojcik, Joanne, "Few offer benefits to unwed couples," Business
Insurance, March 11, 1991.

*----, "Approaching 2000: Meeting the Challenges to San
Francisco's Families," San Francisco: The Mayor's Task Force on
Family Policy, June, 1990.

----, "Domestic Partnership Benefits Under the Seattle Fair
Employment Practices Ordinance," Seattle:The Mayor's Lesbian/Gay
Task Force, March, 1988.

----, "Domestic Partner Benefits Fact Sheet," Seattle:  City of
Seattle, 1991.

*----, "Domestic Partnership: Issues and Legislation," New York:
Lambda Legal Defense and Education Fund, 1990.

----, "Questions for Couples," OUT/LOOK, Vol. 2, No. 1, Summer
1989.

*----, "Recognizing Lesbian and Gay Families: Strategies for
Obtaining Domestic Partners Benefits," San Francisco: National
Center for Lesbian Rights, 1989.

----, "Recognizing Non-Traditional Families," Special Report #38,
Washington, D.C.: The Bureau of National Affairs, 1991.

Our thanks to Christopher Norris, aide to Councillor David
Scondras, Boston City Council, for his assistance and
cooperation.

*These references contain especially valuable analyses and
resources for anyone researching the issues of domestic
partnership.  The San Francisco report is available from the
National Center for Lesbian Rights.

 Mary Sit, "The best workplaces for women," The Boston Globe,
 September 6, 1988.  Martha McDonald, "Domestic partner benefits
 changes," Business & Health, October 1990.  Walter Isaacson,
 "Should Gays Have Marriage Rights?," Time, November 20, 1989.
 McDonald.  In a poll commissioned by Massachusetts Mutual Life
 Insurance Co. 22% of the population
defined "family" as "a group related by blood, marriage, or
adoption"; 74% defined "family" in terms such as "a group that
love and care for each other"
 Rod Sorge, "Gay couples defined as 'family'," Gay Community News,
 July 16, 1989.  Sheila Rule, "Rights for Gay Couples in Denmark,"
 New York Times, October 2, 1989.  Denmark
became the only country in the world to recognize gay marriage on
October 1, 1989.
 Tom Stoddard and Paula Ettelbrick,  "Legalizing Gay
 Marriage,"OUT/LOOK, Fall 1989, Vol. 6.  Lambda Legal Defense and
 Education Fund,  "Domestic Partnership: Issues and Legislation,"
 New
York, 1990.
 Lambda Joanne Wojcik, "Few offer benefits to unwed couples,"
 Business Insurance, March 11, 1991.  The Bureau of National
 Affairs (BNA), "Recognizing Non-Traditional Families," Special
 Report #38,
Washington, D.C., 1991.
 BNA
 City of Seattle, "Domestic Partner Benefits Fact Sheet," Seattle,
 1991.
  Wojcik Milt Freudenheim, "Rising Worry on 'Partner' Benefits,"
 The New York Times, August 16, 1989.
 BNA
 Lambda Lambda Wojcik quoted in BNA report Freudenheim
 BNA
 The Mayor's Task Force on Family Policy, "Approaching 2000:
 Meeting the Challenges to San
Francisco's Families," San Francisco, 1990.
 Lambda quoted in McDonald article Warren J. Blumenfeld and Diane
 Raymond, Looking at Gay and Lesbian Life, Boston: Beacon Press,
1989, pp. 79-90.
 McDonald Jim Dinan and Tom Beecken, "Covering Domestic Partners,"
 HMO Magazine, September/October
1991.
 The Mayor's Lesbian/Gay Task Force, "Domestic Partnership
Benefits Under the Seattle Fair Employment Practices Ordinance,"
Seattle, 1988.
 quoted in BNA report quoted in McDonald article Blumenfeld and
 Raymond, p. 374 op. cit., p. 373.  "Questions for Couples,"
 OUT/LOOK, Vol. 2, No. 1, Summer 1989.  Lambda McDonald William
 Celis III, "Benefits for Live-In Mates of Workers Face
 Obstacles", "The Wall Street Journal,"
July 25, 1989.
 estimated lifetime costs of an HIV+ diagnosis is $50,000, plan
 limit is $140,000.  See Dinan and Beecken for a description of
 the calculations and assumptions used by Group Health
Cooperative to rate the City of Seattle's domestic partners.
 Keith H. Hammonds, "Lotus Opens a Door for Gay Partners,"
 Business Week, November 4, 1991.  ibid.  McDonald quoted in
 McDonald article partner registration refers to a civil procedure
 analogous to obtaining a marriage certificate.  The
recognition of the relationship implied by such registration
varies with the municipality.  In the City of West Hollywood,
residents as well as non-residents are welcome to register and
will be treated as spouses by the city while within the city
limits.