Government Sanctioned LGBT Discrimination Challenged

By Boyce Hinman

In 1990 the California Legislature adopted legislation providing long term care insurance for state and local government employees, retirees, and their family members. It is called the CalPERS Long -Term Care Program. The insurance covers the cost of in home health care services, and nursing home care, up to certain dollar limits, in the event that either or both become necessary. The program is administered by the California Public Employees Retirement System (CalPERS).

The 1990 legislation did not, and California law still does not, allow the domestic partners of government employees and retirees to purchase insurance under the program. California does recognize the marriages of state and local government employees, who married same sex partners in the summer of 2008. However, even these spouses are ineligible for coverage under the plan.

These exclusions are being challenged in federal court by the Legal AID Society- Employment Law Center and the firm of Zelle Hoffman Voebel And Mason. They name the US Treasury, the IRS, and CalPERS as defendants in the suit.

In July of 2011 the federal court approved a request that the case be pursued as a class action law suit on behalf of all California gay and lesbian public employees and their domestic partners or spouses. Recently, however, the plaintiffs have asked for a summary judgement in their favor. If the judge grants their request, then the case would be decided in favor of government employees and their domestic partners, without the need of an actual trial. Domestic partners would qualify for the insurance.

Here is the background on this issue. 1990 was long before the concept of domestic partners was written into California law. But I remember negotiating with the staff of the legislator who introduced the bill, and with staff at CalPERS. I urged them to support language in the bill to allow what I was then calling the family partners of government employees and retirees to buy into the program. They steadfastly refused, saying, doing that would eliminate important tax benefits connected with the program. They were probably right.

The program is voluntary. Only employees and retirees who request the coverage receive it. The cost of the program is funded entirely by employee and retiree paid premiums and the investment earnings on those premiums. The state covers none of the costs.

All California public employees, retirees, their spouses, parents, parents-in-law, and adult siblings are eligible for the CalPERS Long-Term Care Program. The law does not explicitly exclude domestic partners but, since the list of eligible family members does not include domestic partners, they are not eligible.

Those eligible to apply must be between the ages of 18 and 79. State and local government employees and retirees can get further information about the program by calling CalPERS at: (800) 982-1775. However, CalPERS says it is not accepting applications for the program at this time.

So what is the tax benefit provided by this program? Under federal law, as regards tax status, there are two kinds of long term care insurance policies. One kind qualifies for favorable tax treatment, but the other kind does not.

Under federal law, part of the premiums paid for qualified long term care insurance qualify for a tax deduction. None of the premiums for a non-qualified long term care policy may be deducted on the federal income tax return. This can be a significant benefit. The amount of allowable deduction for premiums depends on the age of the covered person. People aged 40 and under can deduct $290 of their premium costs on their federal income tax return. People aged 71 and over can deduct $3,680 of the premium cost.

Several factors affect whether or not a long term care policy qualifies for the tax deduction. However, the critical issue here is that covering domestic partners of state employees and retirees would have meant that the policies offered by the state would not qualify for favorable tax treatment on federal tax returns.

You might think the US Defense of Marriage Act was the basis for disqualifying long term care insurance plans that offer coverage to the domestic partners. However, that federal act was not approved by Congress until six years after California adopted its plan. So, It is not clear whether the tax situation would change if the courts eventually overturned the Defense of Marriage Act. The federal law controlling what is or is not a qualified long term care plan is in separate section of federal law. If the courts overturn the Defense of Marriage Act, but do not require changes to that separate section of federal law, domestic partners would still be left out.

We will have to see what the courts decide.

Boyce Hinman is the founder of the California Communities United Institute. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or calcomui.org