Attachment to the Domestic Partners Report from the Division of Human Resources --------------------------------------------------------------------- Statement on Domestic Partner Benefits ====================================== In cooperation with the Task Force on Benefits for Domestic Partners, the Division of Human Resources has sought to obtain information on domestic partner benefits from a variety of sources to aid members of the task force in coming to a clear understanding of the issues, including the cost implications that extending benefits to domestic partners might have for the University. The extension of benefits to domestic partners is a relatively new aspect of employee benefit packages. As a result, information on the issue was primarily gathered directly by surveying employers currently offering domestic partners benefits. As one would expect, their experience with the issues and associated costs is currently limited. Consequently, conclusions based on this experience represent "best guess" estimates which undoubtedly will be influenced as more experience is gained. An additional source of information was a paper drafted by Hewitt Associates. Our inquiries have yielded the following information. * Several municipalities in California, a few private sector employers and universities offer benefits to domestic partners of employees. * Employers have indicated that the average costs of medical insurance for domestic partners is approximately the same as the average cost of medical insurance for spouses. Generally, any added cost experienced by employers seems to result from adding individuals to the employers' medical plans and not from a higher incidence of catastrophic diseases. * Employers typically have specific concerns regarding AIDS when investigating the possibility of offering domestic partner benefits: 1) The belief that the cost of treating AIDS is prohibitive. 2) Employees would be inclined to seek medical coverage for a domestic partner with AIDS. Experience of employers, to date, has indicated that the above concerns have not been realized. The cost of treating AIDS is no more significant than other serious illnesses that are more common. There is also no evidence that employees with domestic partners are more inclined to seek coverage for partners with AIDS. * Overall, employers have indicated that the ratio of employees choosing coverage for their domestic partners in comparison to the number of benefits eligible employees is small. Employers offering domestic partner benefits to same-sex and opposite-sex domestic partners have experienced greater utilization of the benefits by opposite sex partners. It can be concluded, with the limited information available, that the cost of providing domestic partners and their dependent children with medical insurance is directly related to the number of partners and children insured. While it is not possible to accurately predict the number of Penn employees who would choose domestic partner coverage should it be offered, it seems reasonable to assume that Penn's experience in the area of medical insurance would be similar to that of other employers. With respect to tuition benefits for dependent children, the cost of providing the benefit is again related to the number of dependent children using the benefit. Since few employers offer tuition benefits for dependent children comparable to Penn's benefit, there is no basis of comparison to determine usage trends. Penn's tuition benefit is generous. It is possible that employees who would not insure a partner and his/her children through Penn's medical benefits would use the tuition benefit for a partner's dependent children. The potential exists for greater utilization of the tuition benefit than other more standard benefits. It is reasonable to conclude from the available information that the cost of extending medical coverage to domestic partners and their dependent children would not be burdensome. If usage trends of the tuition benefit parallel the usage trends of medical coverage experienced by other employers, the same conclusion can be drawn regarding the extension of tuition benefits. It must be noted that such a conditional conclusion is potentially unfounded and can only be tested with experience. The Division of Human Resources recognizes that there is a cost impact in extending benefits to same-sex domestic partners. In extending those benefits there is a need for clarity concerning precisely who is eligible to receive benefits and under what circumstances. - R. William Holland, Vice President for Human Resources .