Consolidated Omnibus Budget Reconciliation Act: COBRA-Equivalent Benefit for LGBT Workers
The Consolidated Omnibus Budget Reconciliation Act of 1986 provides workers and their families with a safety net when facing life-altering circumstances such as the loss of a job or the death of a sole provider. According to COBRA, group health plans sponsored by employers with 20 or more employees are required to offer workers and their families the opportunity to extend coverage in some circumstances when this coverage would have ended. These circumstances include:
- Voluntary or involuntary job loss (18 months);
- A reduction in hours worked (18 months);
- Transitioning between jobs (18 months);
- Death, divorce or legal separation (36 months);
- A child attaining an age which would otherwise no longer qualify her or him for coverage under the plan (36 months);
- Entitlement to Medicare benefits (36 months); or
- For those with retiree medical coverage, a Chapter 11 bankruptcy filing by the employer (36 months).
COBRA generally requires employers to allow individuals previously covered under the employer's health insurance plan -- specifically limited to employees, an employee's different-sex spouse, and an employee's dependent children -- to maintain coverage for at least 18 months by paying the coverage premiums. Employers generally are permitted to charge up to 102% of the premium cost attributable to the COBRA coverage.
But when a LGBT employee loses or leaves a job, federal law does not guarantee the opportunity to pay for continued coverage for a domestic partner (or a partner's children), even if the employer-sponsored plan originally covered that partner (or the partner's children). This is true even though the former employee – and not the employer – pays the premium for this temporary coverage.
Same-Sex Spouses and Partners
Although COBRA does not mandate employers to provide these benefits to employees with same-sex partners or spouses, employers may nonetheless do so. For example, the city of New York extends COBRA-equivalent coverage to the registered domestic partners of city employees. As of June 2011 he Workplace Project is aware of 538 employers that offer COBRA-equivalent coverage to same-sex partners of employees, including 217 of the Fortune 500.
| Fortune 100 | Fortune 500 | Fortune 1000 | AmLaw 200 | ||
|---|---|---|---|---|---|
| 2011 Total | 73 (73%) | 236 (47%) | 283 (28%) | 122 (61%) |
Employer Considerations
The costs of COBRA-equivalent benefits can be most easily compared to the cost of domestic partner benefits, which are minimal:
Employers should extend COBRA-equivalent benefits to LGBT employees to:
- Remain as competitive as possible in a job market where employee attraction and retention often depends on the benefits offered;
- Boost the morale, and therefore productivity, of LGBT employees who will know that they and their loved ones will be cared for;
- Maintain a commitment to fairness and equality by reflecting this commitment in their benefits program; and
- Enhance the employer's public image as a fair and equal place of employment.
COBRA and Same-Sex Partners and Spouses under the ARRA
The American Recovery and Reinvestment Act of 2009 provides qualifying individuals with subsidized COBRA coverage. More specifically, under ARRA, employers (and in some instances insurers or other third parties) are required to charge qualifying individuals only 35% of the applicable COBRA premium. Employers can recoup the costs of any premium subsidies granted through a payroll tax credit.
However, for several reasons, including that COBRA generally does not apply to same-sex partners or spouses of employees, the ARRA provision does not generally apply to same-sex partners or spouses of employees who elect COBRA-like continuation coverage.
In the Internal Revenue Service Notice 2009-27 (PDF), which provides guidance on the COBRA premium subsidy, Q&As 16 and 23 make it clear that COBRA-like continuation coverage for domestic partners (whether voluntarily offered by the employer or mandated by state law) are not eligible for the COBRA subsidy. Q&A 25 from Notice 2009-27 provides guidance and several examples regarding how employers should calculate and apply the subsidy with respect to ineligible partner continuation coverage.
- Internal Revenue Service Notice 2009-27 PDF [irs.gov]
- New Guidance on the COBRA Premium Subsidy 7 Apr 2009 [thompsonhines.com] - additional calculation examples for coverage with ineligible dependents
What HRC is Doing
The Human Rights Campaign lobbies Congress for the guarantee of equal health care coverage under COBRA. HRC urges Congress to require employers to provide COBRA coverage to any beneficiaries covered under an employee's benefits plan – including a domestic partner – and encourages employers to offer continued coverage to all beneficiaries of their employee benefits plan.
