Gay Couples Pay More for Fewer Benefits

By Eileen A.J. Connelly, AP Personal Finance Writer

NEW YORK (AP) — After Judy Weatherly lost her job as a director at a mental health clinic, the price she and her spouse, Nancy Burke, had to pay for health insurance skyrocketed.

Married in California in 2008, they had coverage through Weatherly's workplace. Once unemployed, Weatherly qualified for the federal COBRA subsidy to extend her benefits, but the same wasn't true for Burke. This meant that although they were able to pay just 35% of Weatherly's premium to extend her benefits, they must pay full price for Burke — adding up to at least $5,000.

Even when legally married, a patchwork of state laws, combined with a federal law that bans recognition of such unions and varying corporate policies, makes a range of financial matters more complex for gay and lesbian couples than for their straight counterparts.

Take taxes. In states that recognize same-sex unions, couples may file joint state returns and claim the benefits offered married couples.

But the 1996 federal Defense of Marriage Act prevents the Internal Revenue Service from accepting joint returns from gay couples.

"We've been together a long, long time," said Burke, 51, noting they'll celebrate 25 years in September. The Richmond, Calif., couple owns property and has investments together — and items like these factor into how taxes are prepared.

"We have to file individually federally, and then for the state we file a joint return," Burke continued. "In order to do that, we have to have a tax accountant who really knows her stuff."

Research by The Williams Institute, a UCLA think tank focused on sexual orientation law and policy shows the additional costs extend well beyond the price of preparing another tax return. For instance, health insurance benefits for domestic partners are taxed as income, but not for married couples. The researchers found this one item adds, on average, more than $1,000 per year to a couple's tax bill.