Resources

Domestic Partner Benefits: Cost and Utilization

After more than a decade of experience with employers offering domestic partner health benefits, the cost to most employers has been negligible. Coverage for domestic partners increases the number of insured individuals enrolled in the health insurance plan, but that coverage is no more expensive than for other individuals and enrollment overall is far lower than original estimates.

Overall Impact on Benefits Cost

A 2005 Hewitt Associates study found that the majority of employers — 64 percent — experience a total financial impact of less than 1 percent of total benefits cost, 88 percent experience financial impacts of 2 percent or less and only 5 percent experience financial impacts of 3 percent or greater of total benefits cost.

An earlier, 1997 Hewitt Associates study found the impact on employers' costs was "minimal, with the addition of domestic partners, regardless of whether coverage was extended to same-sex or opposite-sex domestic partners. Companies report increases in medical claims of less than 1 percent after domestic partner coverage was introduced."

Similar research by the Institute for Gay and Lesbian Strategic Studies Research Director M.V. Lee Badgett found that most employers that offer domestic partner benefits to same-sex partners found expenses rose no more than 1 percent. For employers that offer them to same- and opposite-sex partners, expenses rose no more than 2 percent. The analysis is included in our Business Cost Impact of Marriage for Same-Sex Couples publication from 2004.

Cost of Domestic Partner Coverage Relative to Other Dependents

A 2000 Hewitt Associates survey confirmed that coverage for domestic partners is no more expensive than coverage for spouses or other dependents, despite early concerns about the health needs of same-sex partners relative to other dependents.

Experts have posed several possible reasons for this: employees eligible for domestic partner coverage tend to be young and relatively healthy; HIV/AIDS risks are lower and less costly than original estimates; and same-sex domestic partners are less likely to become pregnant.[1]

Utilization / Enrollment

Rates of enrollment have not been particularly high. Possible explanations most commonly cited for this are that same-sex domestic partners are likely already covered by their own employer, or that the employee is simply unwilling to disclose their sexual orientation for fear of discrimination.

  • A 1993 Segal Co. report found that typically less than 2 percent of eligible employees enrolled.
  • A 1995 survey of employers by the International Society of Certified Employee Benefits Specialists found that 75 percent of companies with domestic partner policies reported an enrollment rate of 2 percent or less.
  • A 1996 Towers Perrin report found that less than 1 percent of eligible employees have enrolled their partners, and medical claims rose by less than 1 percent after domestic partner coverage was introduced.
  • A 2000 study by Hewitt Associates found an average of 1.2 percent of eligible employees elected coverage for a domestic partner and that 85 percent of employers reported a cost increase of less than 1 percent.
  • A 2005 study by Hewitt Associates found an average of 1 percent of eligible employees elected coverage for a domestic partner and that an average of 1 percent of employees elected coverage for dependents of a domestic partner.


[1] "Domestic Partner Benefits: Facts and Background." Employee Benefit Research Institute, 2009. Available at: http://www.ebri.org/pdf/publications/facts/0209fact.pdf