October 27, 2011, 11:39 am

Microsoft and Yahoo Equalize Health Benefits for Gay Employees

By TARA SIEGEL BERNARD

The Cost of Being Gay

A look at the financial realities of same-sex partnerships.

With open enrollment season in full swing, several big companies have said that they would begin to reimburse gay employees for the extra taxes they pay on health insurance for their significant others. Now, two more technology giants, Microsoft and Yahoo, have decided to join in, starting Jan. 1.
Married heterosexual couples don’t have to pay the taxes because their unions are recognized by the federal government.
While Yahoo’s new policy will apply only to same-sex partners and their dependents, Microsoft said it would also begin to offer domestic partner insurance to workers with opposite-sex partners. And they will get the extra reimbursement, too.
The movement to equalize benefits has picked up speed in recent weeks, as companies revisit their employee benefit policies for the coming year. Bank of America, Morgan Stanley, and American Express have also announced similar changes. There’s still a long way to go — most companies don’t “gross up,” as the reimbursements are known. But we’ve been closely tracking corporate America’s progress in this chart.
Under federal law, employer-provided health benefits for domestic partners are counted as taxable income if the partner is not considered a dependent. On top of that, the employees cannot use pretax dollars to pay for their premiums — unlike their opposite-sex married counterparts.
So while many big companies offer health insurance coverage for domestic partners, it costs employees more money to use it. To level the playing field between gay and heterosexual employees, more companies are digging into their own pockets to cover the extra expense.
Many of them choose only to cover same-sex couples since heterosexual domestic partners have the option to marry and avoid the extra taxes. That makes Microsoft’s new policy stand out as being particularly generous.
Is your company on our chart? If not, mention the name in the comment section below and we’ll ask the company if it has any plans to change its policy. We’re also curious to learn about any big companies that do not offer domestic partner health insurance.