Beginning in 2012, Yale will help offset the federal taxes gay and lesbian employees pay on health coverage received by their partners.
Compensation and Benefits Director Hugh Penney said in a Thursday email that Yale will pay employees with same-sex spouses and in civil unions $1,500 a year to help cover the cost of a federal tax on employer-provided health coverage for domestic partners. Though same-sex marriage is legal in Connecticut, it is not recognized under federal law and domestic partner health benefits are considered to be taxable income.
“Because of the increasing discrepancies between the state and federal tax treatment of the health care benefits provided to same-sex marital partners, a number of employers have begun to partially or fully offset the federal tax,” Penney said. “Yale has long been progressive in providing equality of benefits for same-sex couples.”
Due to an accounting error, Yale failed to withhold income that covered the federal tax on domestic partner health benefits in 2010. To make up for its failure, the University decided to deduct the funds from the 2011 salaries of roughly 60 affected employees.
The action prompted the Human Rights Campaign, the nation’s largest organization in support of lesbian, gay, bisexual and transgender civil rights, to ask that the University pay for the 2010 mistake and offset the federal tax in the future.
Penney said this year’s decision, approved by the Officers of the University, was not in response to the 2010 payroll problem but instead stemmed from discussions with LGBTQ employees that illustrated the “symbolic and financial importance” of the change.
The average minimum withholding was approximately $1,500 and the maximum about $3,000 in 2010, Vice President for Human Resources and Administration Michael Peel said in an email in January 2011.
Reimbursements that begin on Jan. 1 will amount to $125 per month for eligible faculty and managerial and professional staff — an approximate average of the tax incurred across employees, according to a Tuesday article in the New York Times’ Bucks section. Under the new policy, only employees whose partners are not allowed health insurance from a different source will be reimbursed.
Columbia University will also begin reimbursing eligible employees next year, and the two Ivy League schools will join Syracuse University and Bowdoin College as the only educational institutions to help offset the federal tax on domestic partner health coverage.