Chapter 246, P.L. 2003 — Domestic Partnership Act Benefits

Frequently Asked Questions & Answers
(Updated August 31, 2006)

Chapter 246, signed by Governor McGreevey on January 12, 2004, establishes certain rights and responsibilities for domestic partners in the State of New Jersey. The law, which is effective on July 10, 2004, also extends public pension and State Health Benefits Program (SHBP) benefits to same-sex domestic partners of State employees and permits local public employers to extend those same domestic partner benefits to their employees. This Q & A deals only with the pension and SHBP benefits extended by Chapter 246. It does not address the broader rights and responsibilities covered by the law nor does it cover questions of eligibility for a Certificate of Domestic Partnership since they are outside of the purview of the Division of Pensions and Benefits. Keep these restrictions in mind when you read the Q & A.

PENSION BENEFIT QUESTIONS

1. Q - What does the law provide with respect to pension benefits?

A - The law adds a same-sex domestic partner to the definition of spouse, widow, and widower to the State component of the PERS, TPAF, PFRS, SPRS, and JRS so that the domestic partner is treated in the same manner as a spouse. The law allows local employers to apply the same changes to its employees.

2. Q - Does this law automatically apply to my domestic partner?

A - The Domestic Partnership Act applies to State employees who have obtained a New Jersey Certificate of Domestic Partnership. It also applies to eligible employees of local governmental entities if the governing body opts to adopt the benefit by resolution or ordinance. (Note: a State employee includes employees of the Executive, Judicial, and Legislative Branches paid through Centralized Payroll, employees of Rutgers University, UMDNJ, NJIT, and the state colleges and universities, and employees of the Palisades Interstate Park Commission, the NJ Building Authority, the State Library, the NY Waterfront Harbor Commission, and the Commerce and Economic Growth Commission.)

3. Q - The Domestic Partnership Act says that certificates from other jurisdictions are acceptable in the State of New Jersey. What jurisdictions?

A - Certificates of Domestic Partnership from the following jurisdictions are acceptable to file for benefits under the New Jersey DPA: California; Hawaii; Vermont; Wisconsin; New York City; Cook County, IL; Atlanta, GA; Westchester County, NY; the District of Columbia; Key West, FL; and Seattle, WA

4. Q - What do I do if I have a Domestic Partnership Certificate from a jurisdiction not on the approved list?

A - You can submit the certificate, but you must verify that the certificate is recognized by law in that jurisdiction by providing the following information or documentation:

1. a certificate issued by a governmental entity certifying, registering or otherwise memorializing the domestic partnership;
2. the identity of the public entity responsible for maintaining a domestic partnership registry in that jurisdiction, e.g. a state, county or local bureau of vital records or city clerk; and
3. the law, statute or ordinance which governs the establishment of a domestic partnership in that jurisdiction.
   

5. Q - What is the actual pension benefit gained by a domestic partner?

A - For the PERS and TPAF, the only benefit affected by this law is that for Accidental Death. An eligible domestic partner will now be able to receive a pension benefit if the partner died by accident in the performance of duty while at work. Regular PERS and TPAF retirements are usually not impacted since retirees can already name anyone as a joint and survivor beneficiary of their pension benefit. However, the Internal Revenue Service does restrict who a member can name as a beneficiary under Options 2, A, and B. Under Options 2 and A, a member cannot name a non-spouse beneficiary who is more than 10 years younger than the member; under Option B, the beneficiary cannot be more than 19 years younger. Since the IRS is a federal agency, it is not governed by the provisions of Chapter 246.

For PFRS, SPRS, and JRS, the statutory survivors benefit, provided upon the death of the employee or retiree, will be able to go to a domestic partner under this law in the same manner as is now done for a spouse. For PFRS members who are employed by local public employers, this assumes the employer has elected to recognize same-sex domestic partners through resolution or ordinance.

6. Q - Are the pension benefits provided to a same-sex domestic partner and a spouse identical?

A - No, they are not because of federal tax law. Besides the restriction on option selection described in the previous question, survivor's benefits from an Accidental Disability retirement or accidental line-of-duty death going to a domestic partner would be subject to federal tax. This is not the case with these survivor's benefits going to a spouse.

7. Q - Why are the pension benefits of the Domestic Partnership Act restricted to same-sex domestic partners?

A - The law specifically stated that the pension and health benefits provisions of the law did not apply to opposite-sex domestic partners because they could obtain those benefits by exercising the option of marriage.

8. Q - What does the local employer have to do to extend domestic partner pension benefits to its employees and retirees?

A - The governing body must pass a resolution or ordinance extending the domestic partner benefit to its employees and retirees and file it with the Division of Pensions and Benefits. A copy of the form used to report the adoption of the domestic partner pension benefits can be viewed here.

9. Q - If an employer submits a resolution to extend domestic partner benefits, when will it be effective?

A - The resolution will be effective upon adoption by the governing body and will apply to current employees and retirees of the employer. It will not be retro-active to provide benefits to a domestic partner of an employee or retiree who has already died.

10. Q - Will there be any employer pension costs incurred if an employer adopts the domestic partner pension benefit for its employees and retirees?

A - There will be no appreciable costs for the PERS and TPAF because there are so few accidental deaths and, historically, there have been eligible beneficiaries for most accidental deaths that have occurred. Therefore, adding domestic partner eligibility will have little impact.

There will be some additional cost for the PFRS, although it will be several years before those costs are incurred and able to be determined. Very rough estimates indicate that adding the domestic partner benefit may result in an increase in employer contribution requirements of between ½ to 1% of salary.

11. Q - Can a local employer opt to provide domestic partner pension benefits and not domestic partner health benefits?

A - Yes, the decisions to provide health and pension benefits to domestic partners of its employees are separate and distinct decisions that can be made by the governing body.

12. Q - Can a local employer opt to provide domestic partner pension benefits for its PERS employees, but not its PFRS employees?

A - No, if the employer wishes to provide domestic partner pension benefits, it must do so for all its employees.

13. Q - If I am eligible for domestic partner pension benefits through my employer, do I have to provide the Division of Pensions and Benefits with a copy of my Certificate of Domestic Partnership?

A - We require a copy of the Certificate of Domestic Partnership when you list your domestic partner as your pension beneficiary. If, at the time of your death, your domestic partner is eligible for a survivor's pension benefit and you have not provided us a copy of your Certificate of Domestic Partnership, your survivor can provide us the copy.

14. Q - A person, who is receiving a survivor's benefit from the PFRS, SPRS, or JRS and then remarries, loses that survivor's benefit (except for a survivor of a line-of-duty accidental death of a SPRS or PFRS member). Will that also be true for a survivor who establishes a domestic partnership?

A -The intent of the law is to treat a same-sex domestic partner in the same manner as a spouse. Therefore, a person receiving a survivor's benefit who then establishes a domestic partnership with a partner of the same sex will lose that survivor's benefit just as if he/she had married. The establishment of a domestic partnership with a person of the opposite sex, however, will not cause the loss of the survivor's benefit because the health benefits and pension benefits portions of the law do not apply to opposite-sex domestic partnerships.

15. Q - Can an employer who has adopted the pension provisions of the Domestic Partner Act rescind that adoption? If so, what impact would that have on pension benefits?

A - Yes, the governing body of a local employer can rescind its resolution to extend the pension provisions of the Domestic Partnership Act to its employees. However, because of the provisions of Chapter 113, P.L. 1997, the decision to rescind the benefit would only affect employees with less than five years of service. Employees with five or more years in a pension system would be grandfathered for the domestic partner pension benefit while they remain with their employer.

16. Q - I am a vested pension member who works for an employer who provides domestic partner pension benefits. If I take a job with another employer, do I take the domestic partnership benefit with me?

A - No, you do not take the domestic partner benefit with you. It is an employer-specific benefit that is not portable.

STATE HEALTH BENEFITS PROGRAM (SHBP) QUESTIONS

1. Q - Can any local employer opt to cover the domestic partners of its employees in its health benefits program?

A - Yes, both local employers who participate in the SHBP and those who do not partcipate in SHBP have the option of providing coverage for the domestic partners of its employees.

2. Q - Can the governing body of my employer opt not to pass a resolution or ordinance adopting the domestic partner benefit?

A - Yes, the law gives the employer the option to extend or not extend the domestic partner benefit to its employees. Since there are costs inherent with these benefits, the employer makes the decision whether to extend them to employees.

3. Q - Can a local employer opt to provide domestic partner health benefits and not domestic partner pension benefits?

A - Yes, the decisions to provide health and pension benefits to domestic partners of its employees are separate and distinct decisions that can be made by the governing body.

4. Q - Why are the health benefits provided under the Domestic Partnership Act restricted to same-sex domestic partners?

A - The law specifically stated that the pension and health benefits provisions of the law did not apply to opposite-sex domestic partners because they could obtain those benefits by exercising the option of marriage.

5. Q - Can I add the children of my domestic partner to my health benefits coverage?

A - You can add the children of your domestic partner to your health benefits coverage if they are single and under age 23, live with you, and are substantially dependent upon you for support. You will have to file an Affidavit of Dependency when you add them to coverage.

6. Q - When and how can I add my domestic partner to my SHBP coverage?

A - First, you must qualify for the benefit by being a State employee or being an employee of a SHBP-participating employer who has adopted a resolution to extend domestic partner benefits to its employees. To add your domestic partner to your coverage, you must file an SHBP application with your employer with a copy of the Certificate of Domestic Partnership attached. The timing for doing this is just like that for adding any new dependent. When you obtain your Certificate of Domestic Partnership, you have 60 days to add your domestic partner to coverage or you will have to wait until the next regular open enrollment.

7. Q - If I obtain the Certificate of Domestic Partnership before my employer adopts its resolution, when can I add my partner to my SHBP coverage?

A - In this case you will have 60 days from the date the employer adopts the resolution to extend coverage to domestic partners of its employees. Your employer will be responsible for notifying you of your eligibility to add your domestic partner to coverage.

8. Q - The Domestic Partnership Act says that certificates from other jurisdictions are acceptable in the State of New Jersey. What jurisdictions?

A - Certificates of Domestic Partnership from the following jurisdictions are acceptable to file for benefits under the New Jersey DPA: California; Hawaii; Vermont; Wisconsin; New York City; Cook County, IL; Atlanta, GA; Westchester County, NY; the District of Columbia; and Seattle, WA

9. Q - What do I do if I have a Domestic Partnership Certificate from a jurisdiction not on the approved list?

A - You can submit the certificate, but you must verify that the certificate is recognized by law in that jurisdiction by providing the following information or documentation:

1. a certificate issued by a governmental entity certifying, registering or otherwise memorializing the domestic partnership;
2. the identity of the public entity responsible for maintaining a domestic partnership registry in that jurisdiction, e.g. a state, county or local bureau of vital records or city clerk; and
3. the law, statute or ordinance which governs the establishment of a domestic partnership in that jurisdiction.

10. Q - Is it true that my employer can require me to pay for the coverage of my domestic partner?

A - Yes, the Domestic Partner Act allows local employers to require you to pay for the coverage of your domestic partner.
Domestic partners are treated like any other dependent or spouse.

11. Q - I am a retired teacher and the State pays for my pension and health benefits coverage. Can I add my domestic partner to my SHBP coverage?

A - Although the State is paying for your benefits, you were not a State employee and are not a State retiree. Your eligibility will be based on the actions of the governing body of your former employer. If it passes a resolution or ordinance to extend the domestic partner health benefits to its employees, you will then be able to add your domestic partner to coverage.

12. Q - I am a teacher with 25 years of service and my school board does provide domestic partner coverage under its health benefits program for employees. Will I be able to cover my domestic partner when I retire?

A - Yes. As long as your employer provides the domestic partner benefit to its employees, then you can continue the domestic partner coverage in retirement.

13. Q - I am a retired police officer and the State pays for a substantial portion of my health benefits coverage under the provisions of Chapter 330. Can I add my domestic partner to my SHBP coverage?

A - Although the State is paying for a substantial portion of your benefits, you were not a State employee and are not a State retiree. Therefore, your eligibility will be based on the actions of the governing body of your former employer. If it passes a resolution or ordinance to extend the domestic partner health benefits to its employees, you will then be able to add your domestic partner to coverage.

14. Q - I understand that the health benefits coverage for my domestic partner is considered a taxable benefit. Why is that so?

A - An employer can provide certain benefits to its employees on a tax-exempt basis. Those benefits can also be extended to spouses and dependents of those employees on the same tax-exempt basis. The domestic partner benefit may be federally taxable because the federal tax code does not recognize a domestic partner in the same manner as a spouse and does not automatically recognize a domestic partner as a dependent for tax purposes. Therefore, your employer will have to treat the domestic partner benefit as taxable to you and withhold federal income, Social Security, and Medicare taxes on its value unless you provide a certification that your domestic partner meets the federal tax code criteria for a dependent. For State employees paid through Centralized Payroll, you can use the Employee Tax Certification - Domestic Partner Benefit form. For employees of other employers, see your employer to determine how they want this certification provided to avoid the tax withholding.

15. Q - How is the imputed income for my domestic partner's SHBP coverage calculated?

A - The imputed income will be the full cost of Single coverage of the plan in which you are enrolled less any amount you pay towards the cost of the domestic partner's coverage.

If you are an employee of a local employer who requires you to pay the full cost of the domestic partner's coverage, there will be no imputed income for the benefit.

16. Q - I understand that I cannot make pre-tax payments under my employer's Section 125 Plan for the cost of my domestic partner's coverage. Is that true?

A - Yes, it is. Since this is a federally taxable benefit, you cannot use pre-tax dollars to pay for it. You will still be able to use pre-tax dollars to pay for the other parts of your coverage for which you are responsible.

17. Q - Will this domestic partnership health coverage be taxable under my State income tax?

A - If you live in New Jersey, the domestic partnership benefit is not subject to State income tax. If you live outside of New Jersey, you should check with your State's tax agency to determine if the domestic partner benefit will be subject to state taxes.

18. Q - Why does my employer use the cost of Single coverage as the imputed value of the domestic partner benefit rather than the difference in cost between Single coverage and Member & Spouse/Domestic Partner coverage?

A - The SHBP has not covered domestic partners so we have no claims experience on which to determine the true cost of coverage for domestic partners. Until we develop a couple years of claims experience with domestic partners, we are going to use the cost for a single person to determine the imputed value of the benefit. In most cases, this approach is more favorable financially to the employee than any other possible approach to this problem.

19. Q - If you are using the cost of Single coverage as the imputed value of the benefit, why are you then using the Employee & Spouse/Domestic Partner rate to charge for the coverage rather than just double the cost of single coverage?

A - As noted above, the SHBP has not covered domestic partners so we have no experience on which to determine the true costs. Additionally, using another rate category beyond the existing four we already use would be an extremely expensive undertaking because of programming changes that would have to be made to our computer systems, to those of the nineteen health plan providers who administer our program, and to every participating employer's payroll system.

20. Q - I have heard that the domestic partner benefit provided to retirees is also subject to federal taxes. How will this be handled?

A - Yes, the domestic partner benefit provided is subject to federal income, Social Security, and Medicare taxes. Any retiree receiving a State- or employer-paid post-retirement medical benefit who adds a domestic partner to their coverage will have to pay these taxes based on the imputed value of their domestic partner coverage unless the domestic partner qualifies as a dependent of the retiree for federal tax purposes (see Question 22, below).

21. Q - Who will report and pay the employer share of Social Security and Medicare taxes on the imputed income of a retiree's domestic partner coverage?

A - The retiree's former employer is responsible for reporting and making FICA (Social Security and Medicare) tax deposits based on the inputed value of the domestic partner's coverage. To assist Local Employers who have former employees with domestic partner coverage under the SHBP, the Division of Pensions and Benefits provides a monthly report giving the employer the imputed value of the coverage and the FICA tax liability incurred for the month.

22. Q - I am a retiree with domestic partner coverage and the domestic partner meets the federal definition of dependent for tax purposes. Am I subject to federal taxes on the value of my partner's SHBP coverage?

A - No, you are not. If you are a State retiree, you can file a Retiree Tax Certification - Domestic Partner Benefit with the Division of Pensions and Benefits to insure we don't report the value of the benefit as imputed income to the federal government. If you are a retiree of any employer other than the State, you will have to contact your former employer to see how it is handling this issue for its retirees.

23. Q - Who will pay the cost of the domestic partner coverage for a retiree of a local education employer who is receiving free health benefits coverage from the State or TPAF?

A - The State or the TPAF will be responsible for paying for the coverage of the retiree and all eligible dependents as is currently the case.

24. Q - Who will pay the cost of the domestic partner coverage for a local PFRS retiree who is receiving partially paid post-retirement medical benefits coverage from the State under the provisions of Chapter 330, P.L. 1997?

A - The Domestic Partnership Act does not change the payment arrangements of Chapter 330 coverage. The State will pay the appropriate share of the costs of the retiree's full coverage, including that of the domestic partner.

25. Q - Can an employer who has adopted the health benefits provisions of the Domestic Partner Act rescind that adoption? If so, what impact would that have on employee and retiree health benefits?

A - Yes, the governing body of a local employer can rescind its resolution to extend the health benefits provisions of the Domestic Partnership Act to its employees. The decision would be effective upon adoption or on some future date set by the governing body. When effective, domestic partners of that employer's employees and retirees would lose their health benefits coverage as a dependent. The domestic partner will not be offered the opportunity to continue their SHBP coverage under the provisions of the COBRA program since the employer's dropping of the benefit does not qualify as a COBRA event.

26. Q - I have heard that the federal COBRA law does not view domestic partners as qualified dependents and they are not eligible for continuation of coverage like a spouse would be if they lost coverage due to a COBRA event. Is that true?

A - Yes, it is. However, the federal COBRA law sets minimum standards which an employer can exceed. The SHBP considers a domestic partner as an eligible dependent for coverage and will include them in its COBRA program.