Blue Cross and Blue Shield

Anthem Colorado Offers Same-Sex Domestic Coverage to Small Groups

Reprinted from the August 2007 issue of The AIS Report on Blue Cross and Blue Shield Plans, a hard-hitting independent monthly newsletter on business strategies, products and markets, mergers and alliances, and financing of BC/BS plans.

Anthem Blue Cross and Blue Shield in Colorado says it is the first health insurer in the state to voluntarily make same-sex domestic partner health coverage available to employers with 50 or fewer employees. Anthem of Colorado, a subsidiary of WellPoint, Inc., says it provides health coverage to 850,000 members statewide. While same-sex domestic partner coverage has become increasingly common among large employers, it is rarity in the small-group market in all but a handful of states where such coverage is mandated.

A study conducted by the Washington, D.C.-based Human Rights Campaign (HRC) found that more than half of FORTUNE 500 companies offer domestic partner health benefits to their employees — a 12-fold increase from 1995. While it can be difficult for small employers to find health coverage for same-sex domestic partners, the San Francisco Human Rights Commission has identified at least one insurer in every state that offers domestic health coverage for as few as two employees.

In Colorado, Anthem says about half of its largest employer clients (1,000 employees or more) offer such coverage. Anthem made the coverage option available to all new clients on July 1 and to existing clients on Aug. 1.

"We are trying to be relentless in making sure more people in Colorado have access to health coverage," says Anthem spokesperson Sally Vogler. "We're targeting groups of people that might otherwise not have an opportunity to be covered."

The decision to offer same-sex domestic coverage to small employers is not a corporate WellPoint policy, she tells The AIS Report. "Each Anthem state is looking at whether they'll roll this out," she explains. So far, Blue Cross of California and Anthem Blue Cross and Blue Shield of Connecticut have made the option available, she says.

Connecticut Blues spokesperson Karen Nobile explains that "domestic partner coverage is not covered as a standard offering. But it is available upon request. It would apply to same-sex domestic partners," she says. Nobile adds that the plan "offers coverage for those members who go through a civil union procedure, and I think that is.mandated."

Vogler says about 95% of the response the company has received on the new coverage option has been favorable. But, she adds, same-sex domestic coverage is "a heated issue," and a small minority of employers have raised "moral objections" to the announcement.

Although few health plans offer same-sex domestic partner coverage voluntarily, a handful of states require plans to offer such coverage. And as of Jan. 1, 2008, Maryland will require that "any individual or group policy.that allows family coverage and is issued by an insurer, nonprofit health service plan or HMO must offer the option for additional coverage for the domestic partner," according to information supplied to The AIS Report by the Blue Cross and Blue Shield Association. States that already have similar regulations in place include California, Hawaii, Maine, New Jersey and Vermont, the association says. However, there is no mandate that employers make such coverage available, notes Daryl Herrschaft, director of HRC's Workplace Project, which evaluates and monitors corporate policies surrounding gay, lesbian, bisexual and transgender employees.

Aetna offers small-group coverage to domestic partners in New York and Pennsylvania, as well as in those states where coverage for domestic partners is state mandated (California, Maine and New Jersey). While Kaiser Permanente doesn't offer same-sex domestic coverage as a standard option in Colorado, it has made such coverage available to groups that need to offer it for business reasons (e.g., nonprofits that must offer it to receive grant funding), Leo Tokar, vice president of marketing, sales and business development in Kaiser's Colorado region, tells The AIS Report.

"It is uncommon, at least in Colorado," Tokar says of same-sex domestic health coverage among small employers. "Since the state has not stepped in to create or standardize a process for certifying domestic partnerships, [health plans] must either choose not to offer it or create their own process. This becomes either administratively challenging or susceptible to misrepresentation if no process is put into place."

Legislation Addresses Coverage Inequities

Under federal law, employer contributions made to health coverage for domestic partners is considered taxable income for both the employer and employee while legally married employees do not pay taxes on their employers' contribution to coverage. In addition, because employers must pay payroll taxes on their employees' taxable incomes, employers who provide these benefits are taxed at a higher rate as well, according to HRC. Two bills in Congress — The Tax Equity for Health Plan Beneficiaries Act (H.R. 1820) and the Tax Equity for Domestic Partner and Health Plan Beneficiaries Act (S. 1556) would eliminate such inequities. The legislation has strong backing from the Business Coalition for Benefits Tax Equity. The coalition's members include Eastman Kodak Co., Molson Coors Brewing Co., General Mills Inc., JP Morgan Chase & Co., Microsoft Corp. and IBM Corp.

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