Tips for Choosing Employee Benefits, Part 2: Same Sex Couples
When you are deciding whether or not to walk down the aisle, you may want to take employee benefits into consideration. Some companies recognize civil unions and domestic partnerships when it comes to perks such as employer-sponsored health insurance, but others do not. To ensure that you are taking advantage of everything your employer has to offer, you need to know how the way you define your relationship may impact your options.
Do You Need Your Partner’s Benefits?
One of the first things to evaluate when it comes to employee benefits is whether or not you and your partner both plan to work full time. If one person intends to take time off to pursue other interests, like raising children or even starting a new business, that person will probably lose their current employee benefits. In that situation, you may only be able to obtain benefits from your partner if you are legally married. While domestic-partner benefits are becoming more prevalent in corporate America, they are still relatively scarce.
Tips for Maximizing Benefits Without Marriage
If your partner needs health insurance, ask your Human Resources (HR) contact if your significant other can join the group health plan if you pay his or her full premium. It may not work, but if the company says “yes,” the amount you pay for entry into the group plan could be significantly less than paying for an individual plan. It might also give your partner much better health coverage.
It is important to note that if your employer does offer coverage through a domestic partnership benefit, the premium for your partner will be paid with after-tax income. If you and your partner marry, that premium would then become a pre-tax deduction.
Another fact to keep in mind is that if you need coverage under the Federal Consolidated Omnibus Budget Reconciliation Act (COBRA), your employer does not have to extend domestic-partner benefits. Your coverage must be continued, as long as you pay your premiums, for a set amount of time – but there is no requirement for employers to continue non-spouse benefits.
Disability & Life Insurance
If you’re not married and you become disabled, your partner won’t be responsible for providing you with income should your relationship end. Make sure to protect yourself and your income by opting for disability insurance through your employer. I typically recommend that clients opt for after-tax premium payments to provide tax-free disability income from that coverage.
When it comes to life insurance, make sure that you have enough and make sure that your beneficiaries are correct. Because state laws are still inconsistent in regards to legal partnerships and civil unions, same-sex couples should make sure to name each other as the beneficiaries of any policy or investment they want their partner to receive. If you ignore this step, money could end up in the hands of a sibling or parent instead of your significant other during a crisis.
If you’re not married, make sure that you’re saving as much as you can. Your employer’s retirement plan is typically a great place to start due to your ability to make pre-tax contributions (which help reduce the amount it feels like is being deducted from your paycheck) and often comes with an employer match.
Also, make sure to keep your beneficiaries up to date on your employer-sponsored retirement account. You don’t want to have a parent or sibling listed if your preference is to name your partner.
Know Your Options
Your HR department can serve as a valuable resource during the onboarding process or throughout open enrollment periods. If you have any questions, ask for guidance. The decision to not say “I do” is a personal one, but just like every relationship decision, it has consequences. Safeguarding your future may be as simple as filling out a form; just be certain that you know all of your options.
The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. This information is not intended to be a substitute for individualized tax, investment, or legal advice. We suggest that you discuss your specific situation with a qualified professional.
As a Registered Investment Advisor (RIA), Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them make the most of their investments. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started: www.partnershipwm.com.