Effective January 1, 2002, all individual or group insurance contracts issued by any insurer, health maintenance organization, non-profit hospital, or medical service organization subject to regulation by the Maine Bureau of Insurance must offer the option of providing benefits to domestic partners of covered individuals.  Such coverage must be at appropriate rates and under the same terms and conditions as those benefits offered to spouses of married individuals covered under the same policies.
The new statute defines a ¡§domestic partner,¡¨ as:
„h A mentally competent adult who is the partner of a mentally competent covered individual;
„h Has been legally domiciled with the covered individual for at least 12 months;
„h Is not legally married to or legally separated from another individual;
„h Is the sole partner of the covered individual and expects to remain so;
„h Is jointly responsible with the covered individual for each other¡¦s common welfare as evidenced by joint living arrangements, joint financial arrangements or joint ownership of real or personal property.

24 M.R.S.A. ¡±¡± 2741-A, 2832-A, 4249.  The law allows the insurer to require the covered individual and the domestic partner to sign affidavits attesting that they both satisfy the criteria for domestic partnership.  They may also be required to show documentation of joint ownership or occupancy of real property (for example, a joint deed, a joint mortgage or a joint lease), or the existence of a joint credit card, joint bank account or powers of attorney in which each domestic partner is authorized to act for the other.  However, eligibility for coverage as a domestic partner cannot be conditioned on a showing that the domestic partner is financially dependent on the covered individual. 

A domestic partner is subject to the same provisions regarding pre-existing conditions as any spouse or dependent of a covered individual.  Moreover, the domestic partner¡¦s coverage may be terminated if the covered individual notifies the insurer of termination of the relationship.  In such event, however, the covered individual may not enroll another individual as a domestic partner for twelve months after the termination of coverage for the prior domestic partner.

Domestic partners do not qualify for continuation coverage benefits under the COBRA provisions of the Employee Retirement Income Security Act of 1974 (ERISA) if their benefits are terminated.  COBRA requires employers with more than twenty employees to offer group health coverage to qualified beneficiaries who lose coverage as a result of specific qualifying events, for example, a termination of employment, a reduction in hours of employment, the death of an employee, eligibility for Medicare, divorce, and attainment by a dependent child of the age of majority.  For purposes of COBRA, only an employee and the employee¡¦s spouse or dependent children can be qualified beneficiaries who may be eligible to continue coverage.  Accordingly, an adult domestic partner is not eligible to receive COBRA benefits.

Although the Maine Legislature has determined that domestic partner benefits must be offered, the statute does not require employers to provide such coverage.  Indeed, federal law would prohibit any such requirement if the employer¡¦s plan were subject to ERISA.  Even so, if an employer desires to offer domestic partner benefits, the Maine statute permits the parties to negotiate terms of coverage that differ from the terms of the mandatory offer set out in the statute. 

Should an employer decide to offer domestic partner benefits to its employees, care must be taken with regard to the tax implications.  Under federal law, group health benefits provided by an employer are excludable from the employee¡¦s gross income only if the coverage is for the employee and his or her spouse and dependents.  While some state¡¦s laws may recognize same-sex marriages, federal law does not.  However, the value of group health coverage for domestic partners can be excluded from gross income if the domestic partner qualifies as a dependent.  Under the Internal Revenue Code, any individual for whom over half of his or her support for the relevant tax year was provided by the taxpayer and who lives with the taxpayer as a member of the taxpayer¡¦s household can qualify as a dependent so long as the relationship does not violate local law.  Since Maine does not prohibit unmarried cohabitation, domestic partners can qualify as dependents for tax purposes.

If a domestic partner does not qualify as a dependent, the excess of the fair market value of the group coverage provided by the plan to the domestic partner over the amount paid for the employee¡¦s coverage is includable in the gross income of the employee.  This excess amount is subject to withholding for income tax, FICA and FUTA purposes.