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Benefits for the LGBTQ community: What does it mean to be inclusive?

07.15.2019 5 MIN READ


For decades, Ayco has worked with hundreds of companies helping to optimize benefits across all employee populations. Given our unique perspective, we observe trends in the marketplace as employers amend their benefit structures and offerings to keep up with the evolving needs of their workforce. A current focus area is ensuring that benefits are offered equally to all employees, inclusive of all sexual orientations and gender identities.

Many employers are taking action to increase diversity and inclusion efforts within their organizations. The first step is updating policies to provide protections for sexual orientation and gender identity. Employee resource groups or affinity networks are becoming increasingly popular among large employers in order to build a community and highlight diverse populations within a business. Another step in a positive direction is to provide new hire and manager trainings that review nondiscrimination policies.

The LGBTQ population now represent around 4.5% of adults in the U.S. and LGBTQ identification is more common among younger populations, representing 8.1% of millenials.1 Investing in making your company’s benefits more inclusive of LGBTQ individuals directly translates into making your company more attractive when recruiting and retaining top talent, as well as fostering a culture of diversity and inclusion.


Employers can fill the gap where federal and state laws fall short

Marriage equality was a major milestone for the LGBTQ community in 2015; however, the fight for equal rights doesn’t stop there. Believe it or not, courts continue to disagree on whether Title VII of the Civil Rights Act of 1964 covers sexual orientation and/or gender identity. Furthermore, less than half of all U.S. states provide protections on the basis of sexual orientation and/or gender identity. 

Title VII prohibits employers from discriminating on the basis of race, color, religion, sex and national origin. The debate as to whether “sex” encompasses gender identity and sexual orientation leaves LGBTQ workers in a gray area where an employer’s policies and benefit packages may or may not support their unique needs.

In the fall of 2019, two cases are anticipated to be brought to the Supreme Court to address these very issues: 

  • Bostock v. Clayton County, GA and Altitude Express, Inc. v. Zarda: These two cases have been consolidated into one. Both allege that employers discriminated on the basis of sexual orientation
  • R.G. & G.R. Harris Funeral Homes v. EEOC: This case asks whether existing discrimination laws protect transgender employees

If the Supreme Court decides that Title VII extends to LGBTQ individuals, the decision would unequivocally extend equal protection to all individuals irrespective of gender identity or sexual orientation. However, if the opinion goes in the opposite direction, it would represent a major setback for LGBTQ rights, leaving it to employers to decide whether their nondiscrimination policies include sexual orientation and gender identity. 

Key areas of benefit planning


A common misconception is that inclusive benefits will dramatically drive up healthcare costs; however, many employers reported an overall increase of only 3.5% from implementing partner benefits and minimal increases related to transgender-inclusive benefits. In 2019, 62% of Fortune 500 companies offer some level of transgender-inclusive benefits—up from 0% in 2002. 

These benefits include:

  • Mental health benefits
  • Pharmaceutical coverage for hormone therapy
  • Coverage for medical visits or laboratory services related to hormone therapy
  • Coverage for surgical procedures
  • Short-term medical leave for procedures such as re-assignment surgery

Family planning

Nationally, 21% of same-sex couples are raising an adopted child in comparison to 3% of opposite-sex couples.3 Employers are adding a variety of benefits to aid growing families which may be made available to all employees:

  • Adoption benefits: According to the Dave Thomas Foundation for Adoption, employers offer between $500–$35,000 toward financial reimbursement per adoption, however, $9,000 is the average4
  • Fertility coverage: 68% of millennials take these benefits—including surrogacy and in vitro fertilization—into consideration when choosing an employer.5 A majority of fertility policies, however, only provide coverage of infertility diagnoses—which fails to include LGBTQ individuals who may not necessarily fit the definition of “infertile,” but still require assisted reproductive technology in order to have biological children6 
  • Parental leave: Many employers offer some type of leave benefit for new parents including domestic partners (63%), foster parents (41%), individuals acting in lieu of a parent (27%) and grandparents (8%)7

Estate planning

Unmarried same-sex couples will have a number of planning items to consider to ensure their partner isn’t unnecessarily burdened during an already difficult time. Employers can help provide peace of mind by:

  • Ensuring retirement plan survivor options are not limited to spouses only. This means making sure both joint and survivor annuity payments and pre-retirement survivor benefits are available to any beneficiary, not just spouses
  • Providing access to group legal plans which can assist in will preparation, trusts, power of attorneys (POA) and more. A commonly overlooked planning point is setting up healthcare and financial POAs
  • Making it possible to designate beneficiaries in one central location or providing step-by-step instructions on where to go to review and update beneficiaries for retirement, life insurance and equity plans (long-term incentives and employee stock purchase). If an equity plan does not allow for beneficiary designations, it’s important that participants set up transfer-on-death (TOD) designations on their accounts so they aren’t tied up in probate

Insurance planning

Gender and medical history are part of the life insurance underwriting process, but shouldn’t prevent transgender individuals from being able to apply for, or obtain coverage, if eligible. 

It’s important for employers to understand and communicate to employees how their insurance provider defines gender and sex for underwriting purposes to ensure employees’ applications are filled out correctly and to avoid potential denial of claims down the road. 

Whether the underwriting process considers assigned gender at birth versus current legal gender marker can vary from carrier to carrier.

Financial planning

 LGBTQ individuals face unique obstacles to financial success and studies have shown that they want to work with financial experts to help plan for their future financial health at a much higher rate than non-LGBTQ. According to a Prudential survey, 27% of LGBTQ respondents have an employer-sponsored retirement savings account and only 21% have an individual retirement account (IRA). Furthermore, 62% of respondents say they’re currently not saving for retirement at all.8

LGBTQ investors have unique needs in respect to trust and estate planning and want to work with professionals who are familiar with their financial challenges.


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1In U.S., Estimate of LGBT Population Rises to 4.5%, Frank Newport, May 22, 2018, Gallup,

2Corporate Equality Index 2019: Criteria Updates, 2019, Human Rights Campaign,

3How many same-sex couples in the U.S. are raising children?, Shoshana K. Goldberg and Kerith J. Conron, July 2018, The Williams Institute UCLA School of Law,

4Adoption-Friendly Workplace Employer Toolkit, 2019, Dave Thomas Foundation for Adoption,

5Fertility benefits: Going above and beyond, Kate Ryder, April 12, 2019, Employee Benefit News,

6Is your fertility benefit excluding some employees?, Kayla Webster, April 29, 2019, Employee benefit Advisor,

7Paid Leave in the Workplace 2017 Survey Results, Justin Held, CEBS & Teri Dougherty, 2017, International Foundation of employee Benefit Plans, Inc.

82018 Financial Wellness Census™ The Cut exploring financial wellness within diverse populations, 2018, the Prudential Insurance Company of America,


For disclosures relating to this article, please click here.