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Beginning next month, Cambridge could become the first municipality in the country to offer a unique benefit to city employees with same-sex spouses.
It will reimburse those employees for the federal taxes they pay on their spouses' health insurance. Employees in heterosexual marriages don't pay that tax, but same-sex employees do because the federal government doesn't recognize gay marriages.
Cambridge is following in the footsteps of some private companies, including Google, that do the same thing.
The personnel director for the city, Michael Gardner, spoke with WBUR's All Things Considered host Sacha Pfeiffer about the new policy.
Sacha Pfeiffer: If you're a Cambridge city employee in a same-sex marriage and your spouse is on your health plan, what are you paying that heterosexual married couples are not paying?
Michael Gardner: The value of the health insurance for your partner or your spouse and any dependents of your spouse are considered under federal tax law to be income. So we have to tell the employee that the health insurance benefits that their spouse receives are taxable to them. And that's unlike what happens in an opposite-sex marriage, where it's not a taxable item.
The city of Cambridge thinks this is unfair. Why?
Because there's no difference between our employee who's married to an opposite-sex partner and our employee who's married to a same-sex partner. They're providing the same work, they're receiving the same pay, they're receiving the same health insurance — except in the same-sex relationship there's a federal tax penalty simply because the spouse is of the same sex as our employee. And that does seem unfair.
So the city of Cambridge thinks this is discriminatory, essentially. Explain briefly how you have fixed this.
Every quarter we have to tell both the employee and the federal government what the value of the extra insurance being provided to the same-sex partner is. What we've done is decide to pay 20 percent of that as a cash payment to the employee to help them make up the extra tax burden they will have to pay.
Let's do a hypothetical. If there's a city of Cambridge employee who makes $50,000 and is married to a same-sex partner, how much might the health insurance value be of that same-sex partner's health insurance?
"There’s no difference between our employee who’s married to an opposite-sex partner and our employee who’s married to a same-sex partner."Michael Gardner, Cambridge personnel director
And the federal government then taxes that employee as if they make $58,000 instead of $50,000?
So the city is taking 20 percent of that extra $8,000 in health insurance and cutting a check to the employee for that amount?
That's right — on a quarterly basis.
And presumably that check will go right back out the door to pay the tax?
That's a rough estimate of what the tax impact of having this health insurance with a same-sex partner will cost.
How much is it going to cost the city of Cambridge to do this?
When fully implemented — and some of the employees are unionized, so we have to actually reach agreements with unions about that — at current rates it will be about $33,000 a year.
It will add $33,000 to the city of Cambridge budget?
How many employees are affected by this in Cambridge?
Currently, about 22.
Thirty-thousand dollars sounds like a relatively small amount of money. But right now there are many, many cities and towns quite financially strapped. Can Cambridge afford an extra $33,000 to do this?
We are currently blessed with a reasonable capacity to tax within the Proposition 2 1/2 limits. Although our budget is strained, as are other communities, we're probably among the most fortunate in the Commonwealth with respect to resources.
Does Cambridge have to increase its budget in order to do this? Or are you saying that there is money existing within the budget that you can dip into to pay these employees?
We, I think, have budgeted enough money in our health insurance accounts to absorb this increase.
Cambridge believes it's the first municipality in the country to do this. And, again, only 22 people are affected. Is this really largely just symbolic?
We are taking a stand with respect to federal policy. I think we are interested in calling attention to the sort of fundamental unfairness of this. But it is not at all a symbolic matter with respect to the affected employees.
Why now? This could have been changed years ago. It ultimately took an openly gay city councilwoman, Denise Simmons, who pushed for this to make this happen. Why now, why not before?
I think this is a matter of the evolution of both thinking and possibility. I think it took the leadership of a company like Google to help us understand that there was, in fact, a way we could do something for our employees.
This program aired on June 9, 2011.
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