One of Philadelphia’s largest employers has announced it will alleviate a tax penalty faced by some of its LGBT staffers.
The University of Pennsylvania will offer a “tax offset” program for employees who have a domestic partner on their insurance plan.
Because of the Defense of Marriage Act, same-sex couples must pay federal taxes on the value of the benefits that a domestic partner receives, while heterosexual employees enjoy a pre-tax rate for their spouses.
The university will now pay up to $125 a month, or $1,500 annually, to LGBT employees facing this burden.
According to the university’s human-resources department, about 100 employees currently cover a domestic partner.
The tax offset will be available to both full- and part-time employees who are eligible for benefits.
Employees wishing to add a domestic partner can do so through June 30, and the additional funds, which will be considered taxable income, will be dispensed starting in late July.
Penn instituted its domestic-partner policy in 1994.
Jack Heuer, vice president of the Division of Human Resources, said Penn “has a long history of supporting our LGBT community.”
“We were the first Ivy League institution and among the first local employers to include same-sex domestic partners in our benefits coverage, and now we’re among the first universities to provide this tax offset,” Heuer said.
Fewer than 50 American employers offer the benefit, known as the “gay gross up,” with the current list including law firms, big-name technology groups Google, Yahoo and Microsoft and academic institutions Syracuse, Bowdoin, Barnard, Yale and Columbia.
Bob Schoenberg, director of Penn’s LGBT Center, said the move will go a long way to heighten Penn’s already-good reputation as an LGBT-affirming employer.
“This demonstrates that Penn is very serious about equity for its LGBT employees,” he said. “It’s strategically a sound decision because it will attract employees of the highest caliber, both faculty and staff, by showing them that Penn is serious about making its benefits truly equitable.”
Schoenberg said he’s fielded a number of calls in the past week from Penn staffers who are welcoming the decision and noted that the student newspaper last week ran an editorial championing the move.
Patricia Rose, director of Career Services at Penn, will be among the employees impacted by the policy change.
Rose’s partner has been on her insurance plan for several years and, while she said the additional $1,500 will be welcomed, even more important is the message the move sends about her employer.
“The stand that the university is taking is a wonderful thing,” Rose said. “It’s a wonderful indication of the sort of place that Penn is, the respect that Penn has for its employees and about its commitment to equality.”
Robert Drake, local DJ and host/producer at Penn’s WXPN, will also be affected.
Drake, who has worked at the university for 25 years, added his partner to his plan about two years ago.
He said it was appreciated that Penn offered domestic-partner benefits, as his partner has type 1 diabetes and the coverage was essential to his health care, but Drake’s pay immediately took a hit.
“It has been an obstacle that there was this loss of income because the taxes were being taken out for his health-care coverage,” Drake said.
Drake said Penn has long been supportive of its LGBT employees and this latest move further buoys that atmosphere.
“I’ve always boasted about the benefits of working at the University of Pennsylvania,” he said. “It’s wonderful that they have offered domestic-partner benefits, but now they have gone out of their way to say that this isn’t right that we have to pay this extra tax and that they’re going to cover it. They didn’t have to do that, so it’s pretty impressive.”
Jen Colletta can be reached at [email protected].