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Embracing Equality, Enhancing Engagement

October 20, 2015

By Catherine McCabe

Workplace benefits have traditionally been a complex topic for same-sex couples and their employers. Benefits administrators had to navigate a state-by-state legal patchwork of marriage, civil union, and domestic partnership provisions, along with federal and other limitations on benefits for same-sex couples. Employers that wanted to offer same-sex and different-sex couples the same benefits faced numerous obstacles. But a series of court decisions and government agency interpretations have eliminated these legal obstacles and given employers new reasons and opportunities to engage lesbian, gay, bisexual, and transgender (LGBT) employees and their spouses.

Two recent U.S. Supreme Court decisions led to a sea change in the employee and federal benefits available to them. In U.S. v. Windsor (2013), the U.S. Supreme Court ended limits on federal recognition of marriage as only between two people of different genders, and Obergefell v. Hodges (2015) further held that same-sex couples have a right to marry under the Constitution. These cases were followed by guidance issued by the Internal Revenue Service and the Department of Labor. Collectively, the cases and guidance dictate that states must both allow same-sex couples to marry and compel recognition of lawful same-sex marriages performed in other states. Together, the two decisions essentially made same-sex marriage the law of the land in the United States.

But that doesn't mean benefits administration and engagement challenges are gone. Employees may not fully understand how the decisions affect them, leading to confusion and uneven usage of retirement plans, health insurance, and other offerings. In addition, LGBT employees, like other employee population segments, have nuanced legal and financial needs that may require customized solutions and advice.

Some progressive employers like Yale University and the State University of New York (SUNY) system have been ahead of the curve, exploring employee needs and enacting changes well before the law required them to do so. In addition to fulfilling their obligations as plan sponsors, they have created welcoming environments that embrace diversity and found ways to meet emerging employee needs. Other institutions can benefit from their experiences and the solutions they have put in place.

Understanding Changing Needs

Recent marriage equality rulings simplify the administration of retirement and other employee benefit plans for married same-sex couples. However, employers must still ensure their plans are compliant with recent laws and regulations. This may mean updating beneficiary and other forms, implementing changes to state tax calculations, and reviewing plan structure to ensure same-sex marriage rights and benefits are in place and up-to-date.

At the same time, employers need to understand the evolving needs of LGBT employees, especially when it comes to helping them build a solid financial future. Employees may be confused about the benefits they are entitled to, especially if they live in states that did not previously recognize same-sex marriages. Those engaged to marry same-sex partners may have questions about how to avoid the so-called "marriage penalty" (which may apply to both same- and different-sex couples) on their income taxes after tying the knot. Spouses near retirement may need help choosing the best Social Security benefit filing options.

Plan administrators at Yale University found that LGBT employees often need to merge current laws and benefits with complicated combinations of legal documents, including wills, trusts, powers of attorney, and other tools that same-sex couples may already have in place. Prior to the marriage equality rulings, such legal infrastructure was often needed to protect LGBT employees' and same-sex couples' rights, assets, and estate planning preferences.

Different groups of employees have different concerns. It's important for institutions to understand those concerns and to work with their benefits partners to find targeted solutions that can boost employee engagement and financial well-being. This understanding led TIAA-CREF early on, with the help of its clients, to develop a range of workshops and live webinars that help reach as many LGBT employees as possible in the manner they want.

LGBT employees may need help determining what types of benefit and financial documents they need to change and what those changes entail, says Hugh Penney, senior director of compensation and benefits at Yale. To help them, the university offers both webinars and information resources as well as opportunities to work one-on-one with financial advisers who can help employees better understand their individual needs.

"There is a broader uniform issue of how we engage people in planning and developing a solid financial road map for their working years, as well as for their retirement years. That includes targeted outreach, trying to identify the variables that indicate where a person is on their financial journey, and trying to meet them where they are. Part of the process also includes encouraging them to reach out to the vast resources that are available, whether it is the call center, the individual advisory services, or educational programs available through TIAA-CREF and other benefits providers," Penney says.

Creating Pathways to Dialogue

Identifying employee challenges and engaging employees isn't always easy. Not all employees are open about their gender identity. Years of unequal treatment may have made some reluctant to speak out or engage in the process of discussing benefits. Sometimes, employers need to work on fostering welcoming venues to engage their LGBT employees in dialogue and prove that they are responsive to those employees' needs.

Such challenges existed even at Yale, which has been at the forefront of addressing the needs of LGBT employees for more than two decades. Two key events helped the university open lines of communication with LGBT employees and encourage them to share their concerns and suggestions. First, in February 2007, the university appointed its first chief diversity officer and created a new unit that combined offices on disabilities, equal opportunity programs, and work life and child-care, as well as the staff diversity offices. Penney says that sent a clear message about the institution's commitment to being inclusive.

The following year, the university launched the Lesbian, Gay, Bisexual, Transgender and Queer (LGBTQ) affinity group for individuals and their allies. The Yale LGBTQ Affinity Group is open to all Yale staff, faculty, and post-doctoral degree candidates, providing member support advocating for improvements to policies that affect LGBTQ employees, and conducting outreach to the New Haven, Connecticut community.

Since then, Penney says the LGBTQ Affinity Group has become one of the longest-running, best managed, and most effective affinity groups on the campus. He meets with the group at least annually, while other university officers meet with the group more frequently. Together, they've been able to broach sensitive topics and resolve areas of concern.

For example, in 2011 the affinity group raised an important issue regarding the different tax treatment that different- and same-sex married couples could face when purchasing health-insurance policies.  Married different-sex couples could often purchase spousal health-insurance policies using pre-tax dollars, essentially providing a reduction in taxable income. However, when same-sex spouses could purchase such coverage at all, they had to use after-tax dollars, which essentially resulted in policies costing more for same-sex couples. Penney's team worked with the group to develop a subsidy program to help offset much of the additional tax burden LGBT couples faced.

"From a benefits perspective, both the institution and the affinity group view the ongoing dialogue positively and consider the partnership a great success," Penney says.

The LGBTQ Affinity Group's partnership with Yale has led to important conversations and a growing sense of trust between the group's members and Yale leadership. In addition to the issues like the unequal health-insurance cost problem that have been brought to light and addressed, the group has also made it easier for Yale to continue navigating the post-ruling environment. Penney says the group continues to be at the forefront of identifying LGBT and other employee concerns and engaging university leadership in finding solutions.

Serving Varied Needs in a Cross-Campus Effort

Coordinating a unified education and outreach effort across disparate locations and to varied audience segments represents another set of challenges. At SUNY, university leadership, including the board of trustees, chancellor, and campus presidents are all committed to diversity and inclusion throughout the system. Finding ways to serve the university's LGBT students and employees has long been a priority, says Dave Morrell, director of university benefits.

Yet, SUNY's presence spans the entire state in 64 geographically diverse campuses. To keep its finger on the pulse of the needs of each campus, SUNY's chief diversity officer works with campus diversity officers, diversity associations and groups, student services centers, and student groups to discuss particular needs, then roll out pilot programs to test solutions. Those efforts have resulted in LGBT community-targeted resources and programs on 50 of the system's campuses, each designed to serve specific needs that were identified. Some of these include:

  • A gender and sexuality resource center at the Albany campus.
  • An LGBT wellness program at the Buffalo campus.
  • A weekend-long LGBT family conference at the Binghamton campus planned for March 2016.

To emphasize the system's commitment to its varied population segments, SUNY held its first system-wide conference in 2014 with a theme of "diversity counts." Morrell says the event sent a resounding message that people are valued for their differences at SUNY. It also highlighted the need for information-sharing, both within the system to identify opportunities and with partners who could help find solutions and share new ideas.

"We have a very good understanding of the needs and nature of our system, but some of our business partners such as TIAA-CREF work with 15,000 other institutional clients around the country as well. They can provide us with a lot of insight and advice on what other institutions are doing, immediate trends, and initiatives we might want to try and experiment with," Morrell says.

To facilitate such information-sharing and address the specific needs of SUNY's LGBT community, the system recently implemented retirement planning sessions in partnership with TIAA-CREF and other investment providers. Morrell hopes to expand the program from retirement planning to other types of resource planning, such as health insurance, estate planning needs, and other resources and services.

Reaching Out and Measuring Results

Measuring the results of LGBT programs can help institutions determine the effectiveness and relevance of their programs over time and make changes when needed. And while institutions may share common goals for their educational and engagement programs, how they actually measure results may vary. 

At SUNY, there is a focus on feedback. Diversity leaders, HR representatives, and others gather feedback from students, employees, and groups and measure success through surveys, face-to-face discussion, attendance tracking, and other mechanisms. The system also scores itself through its annual report card, where it reports its overall diversity efforts, compared to baselines it set during the 2008-2009 school year. 

SUNY's diversity officers also attend conferences to keep up on the latest thinking about how to foster diversity on campus and in the community. Ultimately, the greatest measure is how effective they are at addressing the specific challenges employees are facing, Morrell says. What they are doing is apparently working. In 2015, for the fourth consecutive year, the SUNY system was honored with the INSIGHT Into Diversity Higher Education Excellence in Diversity (HEED) Award, a national award that measures achievement in a variety of diversity and inclusion areas, including programs and outreach, student recruitment and retention, and hiring practices for faculty and staff.

At Yale, the measurement standard is engagement. Outreach, awareness, and dialogue are critical to ensure that employees are informed of the benefits available to them and to raise participation levels, Penney says. When the university worked with TIAA-CREF to hold a workshop after the Windsor decision, the event drew a standing-room-only crowd. While more specific metrics can be difficult to assess, such a show of interest shows Penney and his team that they're providing information and services the community wants.

The court rulings over the past two years have clearly had a profound effect on LGBT employees and same-sex couples, especially when it comes to workplace benefits. While those decisions have made it easier for some employers to provide equal benefits to LGBT employees and their spouses, other challenges remain. Employees may be confused by or unaware of the changes, including how to merge them with their current situations or the legal frameworks they have in place. Sometimes, the issues faced by LGBT employees and same-sex couples are different than those faced by other population segments and their spouses. Employers that value diversity and wish to engage this population are finding success through a combination of fostering outreach, tailoring benefits, and measuring results. By seeking out and listening to the community and working with a financial services partner knowledgeable in LGBT employee matters, institutions can deliver powerful solutions in an era of marriage equality.

Catherine McCabe is a senior managing director for the institutional business division at TIAA-CREF. She is head of the field consulting group, which is comprised of more than 400 highly-trained, licensed financial consultants focused on improving individuals' financial well-being and retirement readiness. The group provides advice to individuals about retirement planning, and improves their financial literacy through specialized seminars and workshops serving every life stage. E-mail: cmccabe@tiaa-cref.org.

Author's note: Nothing in this document is intended to, nor should it be construed to, suggest the creation of a legal partnership or joint enterprise by the use of the terms "partner" or "partnership." This material is for informational purposes only and the statements made above represent TIAA-CREF's understanding of applicable law. Neither TIAA-CREF (nor its affiliates, distributors, employees, representatives and/or insurance agents) provide legal or tax advice. We suggest that you confer with your personal tax and legal advisors.

Partnering With Your Financial Institution

An experienced financial institution that is committed to diversity and inclusion can make identifying, addressing, and meeting the needs of lesbian, gay, bisexual, and transgender employees a much smoother process. The key is to work with an organization that has deep knowledge of the LGBT population and the nuanced needs of each segment. Look for an institution that has been at the forefront in addressing the challenges LGBT people have faced when it comes to retirement, estate planning, and other financial issues.

Such qualities were important to both Yale and the State University of New York (SUNY) system of universities, where diversity and inclusion are priorities. TIAA-CREF has supported their outreach to LGBT employees through webinars, events, and information resources, helping them understand what the recent U.S. Supreme Court rulings and subsequent guidance mean to them.

"All of our partners, and particularly TIAA-CREF, have been extraordinarily generous with their time and resources and helping us to brainstorm, design and conduct many of the services and programs that we have successfully launched here," says Dave Morrell, director of university benefits at SUNY.

Offering a variety of programs, services and advice options that meet the unique needs of employees is central to offering an effective employee engagement program. TIAA-CREF offers comprehensive communications, education, and financial planning programs designed to meet the evolving needs of LGBT employees. These programs include:

  • Customized information and education resources tailored to LGBT employees and married same-sex couples.
  • Live webinars that educate employees and allow them to ask the questions they need answered.
  • One-on-one advice from advisors who can give employees individualized advice and help them tailor a retirement plan designed for their unique circumstances.
  • Wealth-planning services such as trust administration for LGBT employees.

"LGBT employees have equity and parity on healthcare, retirement, and other benefits, but that doesn't mean that there aren't substantial issues that remain," says Hugh Penney, senior director of compensation and benefits at Yale University. Finding the right benefits provider to work with is a long-term investment in employee satisfaction and financial security.

Consider these TIAA-CREF resources for deeper insight into the financial planning considerations of same-sex couples: