The Vermont Civil Union Review Commission met on Tuesday, September 18, 2001, beginning at 9:30 a.m. in Room 30 of the State House in Montpelier, Vermont.
The following members were present:
Stephen Reynes, Chair
Mary Kehoe, Vice-Chair
Martha Csala
Hon. Francis McCaffrey
Annette Cappy
Rep. Thomas Little
Harvey Golubock
Staff Present:
Michele Childs, Committee Counsel
Katie Pickens, Committee AssistantOthers Present:
Nancy Remsen, Burlington Free Press
David Mace, Vermont Press BureauThe minutes of August 7, 2001 were reviewed and approved.
Stephen Reynes, Chair of the committee, explained the focus of the meeting was to examine whether nonrelated persons over 62 years of age should be permitted to establish a reciprocal beneficiaries relationship, and whether the legal benefits, protections and responsibilities of a reciprocal beneficiaries relationship should be expanded. He and Ms. Childs explained Representative Flory, Chair of the House Judiciary Committee, was unable to attend the meeting due to schedule conflicts, but may attend either the October or November meeting. Ms. Childs had also invited representatives from the Coalition of Vermont Elders (COVE), the Vermont Chapter of the American Association of Retired Persons (AARP), the Vermont Chamber of Commerce, and the Vermont State Employees Association to the meeting, but they declined to attend at this time.
Ms. Childs distributed materials relating to Act 91, and summarized the contents of updated health department tables. The health department reports no reciprocal beneficiaries relationships registered to date. According to the latest civil unions figures as of September 13th, there have been 2,828 civil unions, of which 531 are Vermont couples and 2,297 are out-of-state couples. The next two committee meetings are scheduled for:
October 16, 1-5 p.m. to take testimony from persons who are in civil unions
November 13, to discuss the report to the Legislature
Jackie Hughes, Legal Counsel for the Department of Banking, Insurance, Securities, and Health Care Administration, testified expanding full insurance benefits to persons in reciprocal beneficiaries relationships will have an adverse affect on the insurance markets in Vermont. The fact Vermont residency is not required to enter a reciprocal beneficiaries relationship and it is very easy to enter and exit such a relationship means there is no way of calculating the number of people who may be interested in establishing such a relationship. The Vermont insurance market, which Ms. Hughes characterized as small and fragile, has few carriers for individual and nongroup products. Large unknowns make companies nervous, said Ms. Hughes. Initial reaction from insurance companies was that pricing will “go through the roof” if insurance benefits were expended to reciprocal beneficiaries and insurance products would need to be repriced. If repricing is too expensive, companies will be forced to stop writing insurance in Vermont.
Ms. Hughes expressed concern about adverse selection occurring if insurance benefits were extended to reciprocal beneficiaries. Her concern was people may enter a reciprocal beneficiaries relationship solely to obtain insurance benefits for an elderly or ill relative and that it could skew the numbers, making it more expensive for everyone. Ms. Hughes said companies that are concerned about extension of coverage to reciprocal beneficiaries did not have the same reaction to civil unions because they believed the numbers for civil unions would be small and the effect negligible.
In regards to civil unions, Ms. Hughes said implementation of the law has gone smoothly. Some civil union couples have received lower insurance rates because insurance companies view a civil union as a sign of stability, similar to marriage. However, because of the uncertainty of whether federal law will recognize a civil union partner as a spouse for insurance purposes, persons in civil unions may not be covered by continuation benefits (COBRA, VIPER) or the limitations on preexisting conditions under the Health Insurance Portability and Accessibility Act (HIPAA). Ms. Hughes was asked to consider this issue further and respond to the commission at a later date with more information about whether Vermont could take steps to insure that civil union couples received equal benefits under the law.
Questions from the general public about insurance benefits can be directed to the department’s consumer assistance toll free phone line for health care. The department jointly produced a pamphlet with the tax department, which is available to the general public.
Leigh Tofferi, Director of Government and Public Relations for Blue Cross/Blue Shield of Vermont, was also very concerned about adverse selection. He testified, unlike persons in a civil union, persons entering a reciprocal beneficiaries relationship are primarily doing so to obtain benefits. If benefits were extended to reciprocal beneficiaries, insurers expect to get a disproportionate number of persons who are a “bad risk”. Adverse selection would require significant pricing changes. Thus, Blue Cross/Blue Shield would find it difficult to support an expansion of reciprocal beneficiaries relationships. Mr. Tofferi expressed concerns about fluidity – the ease of entering and exiting the relationships - as a problem. There are legal issues that need legal counsel, i.e. the IRS definition of dependents, tax issues, and COBRA issues. Mr. Tofferi said there has been no significant impact by civil unions on BC/BS of Vermont and that the company has chosen not to even track it.
Kathy Callaghan, Director of Employee Benefits with the Vermont Department of Personnel, spoke regarding the impact of an expansion of benefits to reciprocal beneficiaries on state health plans. State health plans total $68 million dollars, 80% of which is paid by the state. Since 1994, the state has covered domestic partnerships of the same sex or opposite sex. She noted there is an income tax penalty for domestic partners (civil unions partners included) because the 80% the state pays becomes imputed income to the employee with the insurance benefit. Ms. Callaghan said that the expansion of reciprocal partnerships would cause major concerns because it would be very hard to administer and very difficult to estimate the numbers of people who may enter such a relationship. She estimated costs would rise and would be spread out over all the plans. She also expressed concern the state may be obligated to cover someone who might otherwise be covered by Medicare.
George Phillips, Policy Analyst for the Vermont Department of Taxes, indicated the department won’t see civil union tax forms until 2002, so it has very little information on the effect of civil unions. He distributed and reviewed a table, titled “Estimate of Decreased Income Revenue from Expansion of Civil Unions.” Minor changes were made to the Vermont tax form because of Act 91. The department expects there may be a small revenue loss, but nothing major. Tax consequences are not a major factor in deciding whether to enter a civil union or a reciprocal beneficiaries relationship.
The committee spent the remainder of the meeting for commission planning and discussion of the work plan to produce a report to Legislature in January.
1. Conduct a “FAX blast” survey of all state agencies to respond by a deadline date on effects of Act 91.
2. Ask BISHCA to provide more information about how civil union couples may be affected in regard to continuation benefits and limitations on preexisting conditions.
3. Ask a Department of PATH representative to provide testimony at the next meeting.
4. Take testimony from civil union couples on how the law has effected them.
a. Shortcomings
b. Recommendations
c. How it has strengthened family life
5. Take testimony from the Court.
The general perception of commission members was that on the surface there does not appear to be a demand for expansion of reciprocal beneficiaries, since not a single person has applied for reciprocal beneficiary status in the last year since the law was enacted. There may be a need to educate people about the availability of reciprocal beneficiaries relationships. It does not appear that people perceive reciprocal beneficiaries relationships as a platform on which to build added benefits.
The next meetings of the Commission will be Tuesday, October 16, 2001, in the Ethan Allen Room of the State House.
Respectfully submitted,
Michele Childs
Legislative Counsel