“The times they are a-changing”... the words penned by Bob Dylan couldn’t be truer of the insured benefits landscape today.
While there have been changes on many fronts, it has been particularly visible in the area of inclusion regarding benefits to employees. Driven in part, by global benefits frameworks that encourage this at multinational firms and progressive Indian firms and supported in turn by a welcoming millennial workforce – we now see more benefits changes in India that address openness and inclusion and one key sector in focus has been the LGBTQ community.
While a lot has been initiated, a lot more needs to be done.
How Are Firms Making These Changes?
Insured benefits to the LGBTQ employee workforce are largely distinguished by the medical insurance benefits that apply to this group – since life and accident benefits apply to them in equal measure anyway (like any other employee group).
The primary change we see employers adopting is the recognition of long-term same-sex partners as part of the covered family unit. In many ways, this is a key change as it underscores the right of this section of the workforce, to provide health security for their long-term partners. This is even more progressive given that same-sex marriages are yet to be ratified in India and only about 25 countries recognize same-sex marriages today. This has been a very progressive approach as in our experience, many countries are yet to address benefit changes to this community adequately. It was only in 2015, for instance, that same-sex couples were given equal marriage rights in the USA. In Hong Kong, for example, it is only recently in 2018 that the courts required the government to provide spousal benefits on visa rules to same-sex partners. Seen in that context, this has been a progressive change.
The secondary change that we see firms adopting is the ability to address gender dysphoria and allow for gender affirmation or gender change surgeries to be covered under benefit plans. In many plans, these are now being included as an additional coverage item within the inpatient list of covered treatments and within the existing employee, the family sum insured limits. While this may not cover costs in entirety, this is a step I believe in the right direction.
What Challenges Do Firms Face in This Area?
We see the following key challenges and opportunities beginning to take shape as firms introduce these benefits - that will also impact how these benefits evolve.
- The first big challenge that firms are grappling with today is defining a long-term partner relationship in the absence of a marriage certificate. Employers need to articulate how life events apply for same-sex couples including association, separation or death of an eligible employee and the subsequent impact on benefits for the partner. Traditional approaches have been to consider specific documents like rent agreements etc. but care may need to be taken that these requirements are not so restrictive to impact participation, to begin with.
- Firms need to also consider the income tax treatment of such benefits with a tax professional. Where an employee makes premium contributions for partner/spouse coverage, benefits received by the LGBTQ partner under an insurance policy are considered tax-exempt (as existing laws do not indicate otherwise) however premium contribution made by the employee for their partner (who is not a legal spouse) may not be eligible for tax benefits. This has increasing significance in flexible benefits plans for example - where costs of benefits are linked to employee contribution for those benefits and if tax deductions are not appropriately made – the resultant tax impact may be incident on the employer.
- Employers must review the plan design closely. Employers should review how they provide gender affirmation surgery coverage in design for example. Today, this is largely applicable to employees, but this could be extended to partners as well. Outpatient costs, medications, and consultations are a large part of costs associated with this benefit, yet coverage today largely extends to inpatient benefits only.
- Employers must make the environment conducive through initiatives like employee sensitivity sessions, access to counselling via EAP programs or other mental health initiatives, encourage groups (that make it acceptable to voice preferences and encourage enrolment/utilization) as well as evaluate every step of your benefits enrolment process to show this sensitivity. Extending the word spouse to mean partner not only in internal benefit communications but also in vendor communications by insurer/TPA forms as well as allowing employees to choose their gender on HRIS platforms, reinforce that sensitivity.
- Employers must review the extension of this approach in other areas. Allow nomination of same-sex long term partners as nominees for life cover as an example (supported by legal frameworks like a will, if needed). Similarly, evaluate frameworks in retirement planning decisions where LGBTQ employees can ensure their long term committed partners are provided for in these plans to the best extent the law permits.
As firms take this decision to extend cover to same sex partners – a potential fall out could be that other employees may request for coverage for hetero-sexual partners as well. There are very few employers who consider coverage for heterosexual long-term partners as part of their approach today. We think firms must keep in mind the original intention of making this change i.e. to eliminate discrimination to the LGBTQ community by providing them dependent cover options in lieu of the traditional spouse coverage as they make their decisions.
So Why Should Firms Consider These Changes?
In many of the firms adopting these benefit changes, actual utilization of these benefits has been low, allowing for insurers to price them at relatively low cost. This is possible since insurers price for benefits, largely on past year claims experience (which in turn is low based on data trends that were seen).
For example, utilization of gender affirmation surgeries has not been more than one or two per 100,000 employees covered. So, while actual claim experience could be higher at a smaller firm, given that this is a benefit that employees voluntarily opt to utilize, this trend may stabilize over time even as these employers would attract employees desirous of these benefits. Similarly, where same-sex partners are encouraged, barring a few firms, actual reporting of same-sex partner data under medical plan enrolment data has been low with relatively low impact on claims. However, as firms attract LGBTQ employees on account of these benefits, utilization trends may increase going ahead and insurers may need to review the impact on an ongoing basis.
So why then, should firms adopt these benefits?
In my opinion, the primary driver for including these changes should not be the relatively low cost to make this change but the intention to attract resources from this talented community in future who would prefer to be with an employer that does not discriminate. It also frames the employer image clearly, as one that encourages an alternate point of view and makes the workplace a tolerant one. In addition, for firms aiming to attract a global clientele, a benefits program that is inclusive in design allows for a meeting of minds and cultures – All of these are very good reasons to make your benefit plan designs LGBTQ friendly.
Whilst these are not intended to be exhaustive – the road ahead for LGBTQ employee benefits has only just begun and I expect bringing inclusiveness in all aspects of benefits design will only gain steam in the days ahead.
As quoted by Bob Dylan – these trends seem to be on the rise, and we have every reason look forward to a more inclusive view on benefits for our LGBTQ employee colleagues.
‘The line it is drawn, the curse it is cast, the slow one now, Will later be fast
As the present now, Will later be past - The order is rapidly fadin'