UPenn’s New Incentive for Same-Sex Couples

A new pre-tax medical plan bucks the state standard

Jack Heuer (courtesy of University of Pennsylvania)

Beginning July 1, the University of Pennsylvania will provide a tax offset program for same-sex couples who work for the university. The program offers as much as $125 per month for employees who are covering same-sex domestic partners under their current Penn medical plans, with a maximum of $1,500 per year. This offset will appear in employees’ paychecks as additional taxable income — minus applicable state and federal taxes — starting in late July.

Many faculty and staff at the university already enjoy these pre-tax health-insurance premiums for themselves and their dependents. But up until now, employees covering same-sex domestic partners under Penn’s benefit plans have had to pay federal and state taxes on the value of their partner’s coverage. This is largely because federal and Pennsylvania tax codes do not recognize domestic partners as dependents.

“At Penn, this tax inequality is being addressed,” says Jack Heuer, vice president of the Division of Human Resources.  “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.”

Early versions of the Obama administration’s Patient Protection and Affordable Care Act included a tax-equalization provision that would have made health coverage for domestic partners and same-sex spouses free from taxation. But the provision wasn’t included in the final bills signed by the president.

Robert W. Carpick, a professor in the School of Engineering and Applied Science, admits the tax offset is a “terrific” step for the university – and more than just financially. He says it will also “have an effect both in retention and recruitment of top talent.”

“The effect goes beyond LGBT employees,” Carpick says. “Employees who have LGBT family members or friends are increasingly informed and concerned about institutional policies like these, so this will give many people one more reason to be proud of Penn, and that includes me.”

Employees who have elected to cover a same-sex domestic partner under a Penn medical plan will receive a letter outlining the tax offset. Any faculty or staff wishing to add a domestic partner to a medical plan has until June 30 to do so for coverage effective July 1. On or after July 1, employees can make changes only during a qualifying life event or the annual Benefits Open Enrollment period.

The result? More take-home pay.

Additional information is available through Penn Human Resources (888-736-6236).