Google adds pay to cover tax on health benefits for same-sex couples

Posted by Tara Siegel Bernard on nytimes.com:

"Working for a company as rich as Google comes with an incredible number of fringe benefits: the free food, the free laundry, the doctor on duty at company headquarters and the impressive five months of maternity leave with full pay and benefits, to mention a few.

"So it is not entirely surprising that the company is about to introduce another set of benefits that pushes the envelope — this time, geared toward its gay and lesbian workers.

"On Thursday, Google is going to begin covering a cost that gay and lesbian employees must pay when their partners receive domestic partner health benefits, largely to compensate them for an extra tax that heterosexual married couples do not pay. The increase will be retroactive to the beginning of the year.

“'It’s a fairly cutting edge thing to do,” said Todd A. Solomon, a partner in the employee benefits department of McDermott Will & Emery, a law firm in Chicago, and author of “Domestic Partner Benefits: An Employer’s Guide.”

"Google is not the first company to make up for the extra tax. At least a few large employers already do. But benefits experts say Google’s move could inspire its Silicon Valley competitors to follow suit, because they compete for the same talent.

"Under federal law, employer-provided health benefits for domestic partners are counted as taxable income, if the partner is not considered a dependent. The tax owed is based on the value of the partner’s coverage paid by the employer.

"On average, employees with domestic partners will pay about $1,069 more a year in taxes than a married employee with the same coverage, according to a 2007 report by M. V. Lee Badgett, director of the Williams Institute, a research group that studies sexual orientation policy issues.

"So Google is essentially going to cover those costs, putting same-sex couples on an even footing with heterosexual employees whose spouses and families receive health benefits.

"The company began to look at the disparity after a gay employee pointed it out, said Laszlo Bock, Google’s vice president for people operations (also known as human resources). Google, by the way, says its benefits team seriously considers any suggestions on how to expand its coverage.

“'We said, ‘You’re right, that doesn’t seem fair,’ so we looked into it,” Mr. Bock said. “From that initial suggestion, we said, let’s take a look at all the benefits we offer and see if we are being truly fair across the board.” As a result, the company also decided to make a few other changes that would help gay employees, including eliminating a one-year waiting period before qualifying for infertility benefits and including domestic partners in its family leave policy — going beyond the federal Family and Medical Leave Act, which requires employers to provide up to 12 weeks’ leave in a one-year period to recover from a medical condition or to care for a relative.

"The extra compensation to cover the domestic partner tax will apply only to same-sex domestic partners, Mr. Bock said, because heterosexual couples can avoid the added tax by marrying. (Same-sex couples can make their unions official in several states, but their relationship will not be federally recognized.)

"The additional pay will also cover the dependents of the employee’s domestic partner. The changes will be retroactive to Jan. 1, and will apply only to workers in the United States."

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