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Marilyn Wingler, background, and her partner, Dale Larkin (foreground; both on right), apply for domestic partnership for same-sex couples at the Dane County City-County Building in Madison on Aug. 3, 2009. Separate domestic partner health and insurance benefits for state employees start on Jan. 1, but federal tax laws will make the benefits pricey for many couples.

State Corrections Sgt. Rachael Merry was looking forward to signing her partner and the woman's daughter up for health insurance under a new provision for state workers that takes effect Friday.

But the modest premiums and the significant federal taxes on the domestic partner benefit appear to make insuring the pair more expensive than Merry anticipated -- as much as $4,500 a year, she's estimated.

"We thought, ‘Now we can finally get family insurance like the rest of my married co-workers and be good to go,'" Merry said. "But this benefit came with a great deal of cost."

Federal law treats the additional health insurance benefit for partners and a partner's children as income, requiring any state worker who participates to pay taxes on it. U.S. Rep. Tammy Baldwin, D-Madison, is seeking a change in federal law that could eliminate those taxes. But, for now, federal rules are making the benefit less attractive, say the workers who are considering taking it.

The benefit, included as part of the state budget passed in June, provides health coverage, pension and other advantages to the unmarried partners of state employees who live together, share expenses and sign an affidavit saying they meet those and other requirements. The benefit is open to both same-sex and unmarried opposite-sex couples.

As of Dec. 17, the Department of Employee Trust Funds reports that 599 domestic partners and 38 dependents such as children have been signed up for state health insurance, and 1,000 state employees in all have signed the affidavits, suggesting they will seek some benefits.

The Legislature's budget office estimates the program could cost $4.8 million next year, though that cost could rise as more state workers sign up. State agencies will have to cover the costs out of existing budgets, since lawmakers and Gov. Jim Doyle didn't set money aside for them.

Rep. Mark Pocan, D-Madison, a key supporter of the benefits, said the change would end UW-Madison's status as the only Big Ten university not to offer the benefits to its employees.

"It's great that we're finally catching up to most larger businesses and all the other Big Ten universities," Pocan said.

So far, 179 University of Wisconsin System employees, including 75 at UW-Madison, have added a partner to their health insurance.

Julaine Appling, president of Wisconsin Family Action, which advocates for traditional marriages, said those benefits were improper.

"It's unfortunate at a time of great economic crisis it's going to cost taxpayers more to give these employees special benefits," Appling said.

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Wisconsin Family Action sued this year to try to invalidate a statewide domestic partner benefits registry that is available to all same-sex couples, not just state employees, but has not sought to block the state worker benefits.

Democrats in Congress like Baldwin are pushing to give unmarried couples like Merry and her partner similar treatment for their health benefits under federal tax law as married couples. The proposed change is part of the House version of the health reform bill but not the Senate version and is also in separate legislation in the House.

If the change passes, it could increase the number of workers taking advantage of the benefit both in state government as well as at other area employers offering the benefit such as private businesses and the city of Madison.

"This is a critical step toward ensuring health care for all," Baldwin said in a statement.

Pocan said he won't save much money on health insurance premiums by switching his partner, Philip Frank, to a state health plan because it will likely cost him between $1,400 and $1,900 in additional income taxes. Still, Pocan said, he will likely make the change because the state plan offers better coverage.

Merry, who works at Prairie du Chien Correctional Institution and lives just over the Iowa border with her partner of 13 years, Sonja Fish, and Fish's teenage daughter, will also see higher taxes.

Adding the two extra family members to her health coverage will increase her yearly taxable income by $12,600, according to Employee Trust Funds figures. Merry is still working out what that will mean to her in higher taxes.

Whatever the cost, Merry will likely have to pay it. Fish, a retired corrections employee herself who hurt her back on the job, has Medicare but lost her supplemental health coverage in November and has no other good options for replacing it.

With Fish's back troubles, "we have to have her as covered as possible," Merry said.

State Journal reporter Mary Spicuzza contributed to this report.

 

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