STATE EMPLOYEES
RETIREMENT COMMISSION
COMPTROLLER'S SEAL STATE OF CONNECTICUT 55 ELM STREET
HARTFORD, CONNECTICUT
06106-1775
TELEPHONE: (860) 702-3480
TELEFAX:(860) 702-3489
MEDICAL EXAMINING BOARD
for DISABILITY RETIREMENT
HEALTH CARE COST
CONTAINMENT COMMITTEE
STATE OF CONNECTICUT
RETIREMENT AND BENEFIT SERVICES DIVISION
OFFICE OF THE STATE COMPTROLLER

COMPTROLLER'S MEMORANDUM NO. 2000-13

March 10, 2000

TO THE HEADS OF ALL STATE AGENCIES

Attention: Personnel and Payroll Officers, Chief Administrative and Fiscal Officers, and Business Managers
Subject: Health Care and Pension Benefits for Same Sex Domestic Partners of State Employees and Retirees

I. Background

Pursuant to the terms of a collective bargaining agreement known as SEBAC V, the State of Connecticut and the State Employees Bargaining Agent Coalition (SEBAC) conducted an interest arbitration on the following issue: whether and how domestic partners should be covered by pension and welfare benefits. In an award dated January 31, 2000, the arbiter selected SEBAC's last best offer, which proposed to cover same sex domestic partners of employees and retirees under the State Health Benefit Plan and the State Employees Retirement System (SERS).

As required by the Collective Bargaining Act, the domestic partners interest arbitration award was submitted to the General Assembly on February 9, 2000. With no action having been taken by the General Assembly on the award in the thirty day period which followed, it was deemed approved by the provisions of Connecticut General Statutes, Section 5-278(b). Finally, on March 10, 2000, the State Comptroller's Office was advised that under Connecticut General Statutes, Section 5-200(p) the Administrative Services Commissioner would issue, and the Secretary of the Office of Policy and Management would approve, an order extending the award's benefits to all classified and unclassified employees not represented by a collective bargaining agent.

II.  Introduction

Bearing in mind the background presented above, the purpose of this memorandum is to discuss the administrative and operational procedures being implemented by the State Comptroller's Retirement & Benefit Services Division (Division) to comply with the same sex domestic partners interest arbitration award as it pertains to employees. The award's application to retirees will be addressed by the Division through a separate communication at a later date. As discussed below, these procedures pertain to health care and pension benefits.

III.  Discussion

A. Domestic Partnership Affidavit

In order for employees and retirees to access the health care and pension benefits now available to their domestic partners, a new form, Domestic Partnership Affidavit (CO-1049), must be completed and submitted, along with supporting documentation, to the Division, which will serve as the custodian of this record. For your information, the arbitration award, not the Division, governs the content of the affidavit. A copy of the affidavit is attached to this memorandum and should be photocopied for use until further notice. The affidavit may also be accessed on the Internet at the following address: www.osc.state.ct.us. Please note that the Domestic Partnership Affidavit triggers entitlement to benefits and, without it, neither health care nor pension coverage will be extended to domestic partners.

B. Health Care Benefits

In General. Prior to the arbitration award, the State Health Benefit Plan allowed employees to cover their spouses and eligible dependent children. With the award, employees will now be able to cover their same sex domestic partners and eligible dependent children. Other than this modification, the award does not revise the health benefit plan's eligibility rules. In that connection, opposite sex domestic partners and their dependent children remain ineligible for coverage.

Enrollment Procedures. To implement the interest arbitration award, an Affidavit of Domestic Partnership will be treated in the same manner as a Certificate of Marriage under the State Health Benefit Plan. What this means is that, as in the case of an employee who marries, an employee who executes a Domestic Partnership Affidavit will be accorded thirty days therefrom to obtain medical and dental coverage for his or her same sex domestic partner and eligible dependent children. An employee who executes an affidavit but fails to enroll his or her domestic partner and eligible dependent children within thirty days will be required to wait until the annual health insurance open enrollment period in order to do so. Until further notice, employees seeking to add medical and dental coverage for their same sex domestic partners and dependent children should be instructed to complete a Domestic Partnership Affidavit and the standard health insurance change forms from the applicable carrier, and submit these materials to their employing agency. After the employing agency completes its portion of the carrier's change forms, (a) the original Domestic Partnership Affidavit, with supporting documentation, (b) a copy of the change forms, and (c) a representation from the agency as to the employee's current health care status (carrier, plan, and class of coverage) must be submitted by such agency, not the employee, to:

Office of the State Comptroller
Retirement & Benefit Services Division
55 Elm Street
Hartford, CT 06106-1775
Attention: Health Care Analysis Unit

Upon its receipt of these materials, the Division will either accept or reject the Domestic Partnership Affidavit and so notify the affected employee and employing agency. Assuming the affidavit is accepted, the Division will authorize the employing agency to transmit the change forms in question to the appropriate carriers and supply (a) payroll processing instructions, and (b) an effective date for the coverage requested. As the Division will communicate directly with the carriers concerning coverage changes in process, agencies are requested to refrain from so doing. For implementation purposes and until further notice, the Division will issue payroll-processing instructions to affected agencies on a case-by-case basis due to the below-discussed tax implications associated with health care coverage for same sex domestic partners.

Be advised that outside the annual open enrollment period employees may only add (or delete) same sex domestic partners and eligible dependent children to (or from) their existing coverage. During the said open enrollment period, which is conducted in May and results in changes that take effect on July 1, employees are permitted to make revisions to their carriers and plans.

Tax Implications. There are two important tax implications about which employees selecting health care coverage for their domestic partners should be aware. Along these lines, employees need to understand that these implications are the product of the federal internal revenue code and its regulations, not the arbitration award or the Division.

1. At the present time, employee premium shares are treated on a pre-tax basis, meaning that deductions therefrom are not taken for federal and state income tax, and social security. However, as required by federal income tax regulations, the employee's share of the premium for domestic partner coverage will be treated on a post-tax basis. Premiums treated on a post-tax basis are considered part of an employee's wages for federal and state income tax purposes, and standard deductions are taken from them. In all instances, premiums for employee and dependent children coverage will be treated on a pre-tax basis. A schedule of employee premium shares is contained in Comptroller's Memorandum No.99-23, which may be accessed on the Internet at the following address: www.osc.state.ct.us.

2. Unless the employee attests in his or her affidavit to providing more than fifty percent of a domestic partner's financial support, the premium paid by the state towards the health care coverage for such partner will be imputed and, consequently, reported as taxable income. From this imputed income, standard deductions will be taken, such as federal and state income tax, social security and, where applicable, SERS contributions. To assist employees in understanding this implication, attached to this memorandum is a chart that identifies, based on carrier, plan, and coverage, the additional income that will be imputed in each instance. For employees who attest to providing more than fifty percent of his or her domestic partner's financial support, no income reporting change will occur.

As it is the Division's policy not to dispense advice or counsel on tax matters, employees with questions about these implications should be encouraged to seek guidance from a qualified professional.

C. Pension Benefits

Compared to health care benefits, the impact of the arbitration award on the pension system is considerably narrower. Essentially, two areas, pre-retirement death benefits and spouse waivers under SERS, are impacted.

Pre-retirement Death Benefits. The pre-retirement death benefit is a feature of SERS that is present in each of its three tiers. Simply stated, this provision is intended to protect the spouse of an active state employee who becomes deceased while otherwise eligible to retire, or having accrued twenty-five years of service regardless of age. Where an active employee becomes deceased under these circumstances, SERS presumes that such employee elected to retire on the day before his or her death having elected an allowance which approximates a fifty percent spouse option; pre-retirement death benefits are further conditioned upon the employee and spouse having been married for at least a year prior to such employee's death. As a function of the arbitration award, pre-retirement death benefits will now be extended to domestic partners, provided a Domestic Partnership Affidavit was accepted by and filed with the Division for at least one year prior to the employee's death.

Spouse Waivers. Upon retirement, a SERS member who has been married for at least one year must obtain a waiver from his or her spouse when the said member elects an allowance that does not guarantee lifetime pension income protection for such spouse. As a function of the arbitration award, a SERS member who has had a Domestic Partnership Affidavit accepted by and filed with the Division for at least one year prior to retirement will be required to obtain a waiver when electing an income option that does not afford lifetime protection to his or her domestic partner. Where the requisite waiver is not obtained, the Division will impose a fifty percent option in favor of the same sex domestic partner. As the arbitration award necessitates revisions to the spouse waiver process, the Division intends to address this matter through a separate communication at a later date.

Employees seeking only pension protection for their same sex domestic partners should be instructed to complete a Domestic Partnership Affidavit and submit it, along with supporting documentation, to their employing agency. In turn, employing agencies should submit these materials to the Division at the address referenced earlier in this memorandum along with the notation that the employee is not seeking health care benefits at this time.

IV. Miscellaneous

Change in Domestic Partnership Status. Where a Domestic Partnership Affidavit has been accepted by and filed with the Division, the arbitration award requires the employee to provide notice of any change in the status of his or her domestic partnership. To that end, the Division is developing a new form for employees to use for the purpose of supplying the notice required of them. This new form will be issued through a separate communication from the Division in the near future.

New Hires. Upon hire, employees should be advised of their right to health care and pension coverage for their same sex domestic partners and dependent children, and the procedures outlined herein for obtaining coverage must be followed, with the exception that carrier enrollment, rather than change, forms should be utilized.

COBRA. For purposes of the State Health Benefit Plan, enrolled domestic partners and their dependent children will be deemed qualified beneficiaries under COBRA. For example, COBRA continuation benefits would be extended to the domestic partner of an employee who advises the Division of the dissolution of his or her domestic partnership.

V. Conclusion

Kindly endeavor in good faith to notify employees of the opportunities created for them by the domestic partners interest arbitration award and, to that end, feel free to post and distribute this memorandum, or relevant excerpts therefrom, throughout your agency. Along these lines, the Division is available to assist you in addressing issues raised by this memorandum, as well as responding to questions posed by employees; such assistance may be obtained by calling the Health Care Analysis Unit at (860) 702-3539. To promote the efficient implementation of the arbitration award, do not direct employees to this telephone number.

Very truly yours,
Nancy Wyman
State Comptroller

NW/sw

Attachments follow.

CO-1049 NEW Domestic Partnership Affidavit - WORD 97 format.
Any problems, please call the Health Care Analysis Unit at (860) 702-3539.

 

Additional Annual Employee Income Attributable to Non-Dependent
Domestic Partner Health Benefits Benefits

(Employee Cannot Claim Partner as Dependent)

Change From:
  Individual to 2 Person Individual to Family 2 Person to Family
Anthem Blue Cross      
State Preferred $3,396.24 $3,396.24 $1,642.44
Out of Area $3,974.40 $3,974.40 $1,816.56
BlueCare POS $2,636.64 $2,636.64 $1,259.16
BlueCare POE $2,682.96 $2,682.96 $1,112.64
BlueCare POE Plus $2,646.24 $2,646.24 $1,122.60
       
PHS      
Charter POS $2,439.36 $2,439.36 $1,164.72
Charter HMO $2,534.88 $2,534.88 $1,054.32
Passport HMO $2,560.20 $2,560.20 $1,086.60
       
MedSpan      
POS $2,487.48 $2,487.48 $1,188.00
POE $2,388.36 $2,388.36 $995.40
       
Connecticare $2,358.36 $2,358.36 $969.60
       
Blue Cross Dental $388.32 $388.32 $0.00
       
CIGNA Dental $154.68 $154.68 $64.44

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