Inclusivity has been agroundbreaking development on the federal and state levels, and nowin the workplace. (Illustration: Lincoln Agnew)

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A seismic judicial and legislative shift regarding same-sex partnerships continues to sendaftershocks through the employee benefits industry, providingforward-thinking benefits advisors with an opportunity to helpclients provide more inclusive benefits packages and grow their ownbusinesses.

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“Employers are increasingly recognizing the importance of LGBTbenefits,” says Julie Stich, associate vice president, content, forthe International Foundation of Employee Benefit Plans inBrookfield, Wisconsin. “The growing awareness of LGBT rights hasmade its way into the workplace, and organizations are adjustingthe design of their benefits programs and the language of theirdiversity policies to be inclusive of LGBT employees and theirfamilies.”

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This trend is not simply anecdotal. Each year, the Human RightsCampaign in Washington, D.C., surveys Fortune 500 companies aboutworkplace inclusion practices.

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Related: HRC Foundation lauds health care facilities forLGBTQ inclusion

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“From health care coverage to retirement investments and more,ensuring LGBT-inclusive benefits to employees and their families isan overall low-cost, high-return proposition for businesses,” theCampaign noted in its Corporate Equality Index 2018. “Mostemployers report an overall increase of less than 1 percent oftotal benefits costs when they implement partner benefits, andmarginal increases related to transgender-inclusive health carecoverage.”

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Although social attitudes have long been evolving, a landmark decision by the U.S. Supreme Court isdriving much of the current policy.

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“Supreme Court rulings have played a large role in grantingaccess to health care for same-sex couples through spousalcoverage,” Stich says. “The 2013 U.S. v. Windsor decision changedthe definition of spouse. And in 2015, the case of Obergefell v.Hodges greatly expanded access to health coverage and care for LGBTindividuals and their families when the court ruled to legalizesame-sex marriage in all 50 states.”

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This legislation has been a game-changer for employee benefits,says Teresa Renaker, partner in Renaker Hasselman Scott LLP, anemployment law firm in San Francisco.

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“The availability of civil marriage for same-sex couples haslargely eliminated inclusion issues for LGBT employees in benefitplans,” she says. “For retirement plans, of course, federalemployee benefits law mandates certain protections for all spouses.There's no option for an employer to maintain an ERISA-governedpension plan that doesn't treat all married spouses the same. Fortransgender employees, I think we're seeing a move away from theblanket exclusions for transition-related care that many healthplans used to have.”

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Employers respond

Many businesses have embraced these changes, while others arestill finding their way. Lincoln Financial Group in Philadelphiaidentified three specific workplace trends that presentopportunities for employers and brokers:

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Growth potential exists. Only 1 in3 companies has reassessed or changed benefits. Twenty-eightpercent of the LGBT community overall and 35 percent of thosecurrently married or in a domestic partnership have reevaluatedtheir workplace benefits, enrolled in a new benefit, or increasedtheir contribution to a current benefit.

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• New enrollments are occurring.Fourteen percent of LGBT employees who are married or in a domesticpartnership have enrolled in a new non-medical insurance plan; 11percent have enrolled in a new health insurance plan; and 7 percenthave made changes to their retirement plans, either by enrolling ina new plan or increasing contributions.

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• Education is essential. One-half ofall LGBT employees and 38 percent of those in a domesticpartnership are unaware of how the marriage equality ruling affectstheir workplace benefits. Perhaps most importantly for brokers, 51percent said they would like to speak with someone about theirbenefits.

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One challenge for employers is that despite clarity from theSupreme Court, other federal and state regulations can causeconfusion.

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“Currently, a patchwork of state laws and federal guidance haveestablished mixed workplace protections for LGBT employees, causingsome complexity and uncertainty,” Stich says. “Less than half thestates provide workplace protections on the basis of genderidentity and/or sexual orientation. At the federal level, we'veseen conflicting agency guidance and appellate court decisions asto whether sexual orientation is protected under Title VII of the1964 Civil Rights Act.”

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However, proactive businesses are forging ahead with theguidance that is available.

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“This is due, in part, to changing cultural norms and growingawareness,” Stich says. “Employers are telling us they want to beequitable and inclusive. They've changed policies and benefitdesigns to best serve the needs and priorities of their diverseworkforce.”

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It also just makes good business sense in today's economicenvironment.

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“In this tight labor market, employers are competing for toptalent,” Stich says. “Having a workplace that is supportive ofdiversity—including LGBT individuals—can be essential forattracting and retaining highly skilled and highly sought-afteremployees.”

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Renaker agrees, noting, “When civil marriage wasn't available tosame-sex couples, it was easy to exclude same-sex spouses fromwelfare plans, if that was what the employer wanted to do, simplyby requiring that employees be married in order to receive spousalbenefits. An employer could plausibly say that it was limitingbenefits to married couples for administrative convenience. Nowthat a marriage license isn't a distinguishing characteristic,we've passed the tipping point where it's easier to includesame-sex couples than exclude them, so that's what employers aredoing.”

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This time of rapid change creates promising opportunities forbrokers who are prepared to take advantage of them. “Brokers shouldstay on top of legislative and regulatory changes relating to LGBTindividuals in order to keep their employer clients apprised,”Renaker says. “They should also keep on top of related benefittrends.”

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Paid leave is a good example. “Brokers can helpemployers review their policies to make sure employees withsame-sex and opposite-sex spouses are treated equitably,” Stichsays. “If employees with opposite-sex spouses are allowed to usepaid sick leave or paid caregiving leave to care for their spouse,the same should be offered to employees with same-sex spouses. Willemployees with same-sex or opposite-sex domestic partners beallowed to do the same?”

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Bereavement leave is another consideration.

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“According to the International Foundation's 2017 Paid Leave inthe Workplace survey report, 76 percent of responding employersallow employees to use paid sick leave to take care of a spouse ordomestic partner,” Stich says. “From the same report, employersallow employees four days paid bereavement leave, on average, forthe death of a spouse and three days, on average, for the death ofa domestic partner.”

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Transgender benefits are yet another fast-changing topic.

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“According to preliminary findings from the InternationalFoundation's forthcoming 2018 Employee Benefits Survey report,we're seeing an increase in the percentage of employers offeringthis type of benefit,” Stich says. “More than one-quarter reportedoffering some type of transgender-inclusive benefit this year, upfrom 12 percent in 2016. This year, 22 percent of respondingemployers report covering gender-reassignment surgery (up from 8percent), and 24 percent report covering prescription drugtherapies (up from 9 percent).”

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Inclusivity has been a groundbreaking development on the federaland state levels, and now in the workplace. One clear result is agrowing opportunity for brokers to serve their clients and buildtheir business.

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“Larger employers have led the way on these efforts, but as lawsand awareness evolve, more employers will likely examine theirpolicies and benefit offerings impacting LGBT individuals,” Stichsays.

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As Renaker points out, a proactive approach delivers the bestoutcome for employers, their workers and the brokers who servethem. “An employer that is committed to trying to carve out thatspace is probably not going to be open to persuasion,” she says.“Between federal employee benefits law and federalantidiscrimination law, there's little, if any, wiggle room forprivate employers to not provide equal benefits, as far as LGBTemployees are concerned.”

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