Amit Rakhit earns the same salary as other vice presidents leading drug development teams at the Weston-based biotech company Biogen Idec, but, because he is gay, he ends up bringing home about $3,000 less every year. Unlike his married heterosexual co-workers, Rakhit, 42, is taxed on income that goes toward his husband's health insurance plan; for other spouses, that money is tax-free.
Even in states like Massachusetts where gay marriage is legal, same-sex spouses don't get a tax break from Uncle Sam on medical, dental, and vision insurance because gay marriage isn't recognized under federal law. Starting Jan. 1, Biogen Idec will begin addressing this inequity, joining just a few dozen companies in the United States that offer a similar type of reimbursement, including three based in Massachusetts.
"We cannot let our employees go one more year with this additional burden," said Javier Barrientos, director of global inclusion at Biogen Idec. "We're part of the innovation economy, and we're looking for exceptional talent, and exceptional talent comes in all backgrounds."
Money spent on health care premiums is not considered taxable income, allowing employees to use pretax dollars to buy health insurance. While heterosexual couples get the tax break, same-sex couples do not. To negate the impact, Biogen Idec will add money to affected employees' paychecks equal to the amount of taxes taken out for their spouses' benefits — and their children's, too. This practice, known as grossing up a worker's pay, will restore an average of $2,000 to $5,000 a year to around 40 of Biogen Idec's nearly 4,000 US employees, costing the company around $120,000 a year.
Biogen Idec plans to offer this benefit to employees in every state, even those where same-sex marriage isn't legal, such as North Carolina, where the company has a big presence. Employees simply have to provide proof of marriage, domestic partnership, or a civil union to receive compensation.
Same-sex marriage, now legal in nine states and Washington, D.C., will be getting additional scrutiny when the US Supreme Court takes up two cases involving the issue next year. One could legalize gay marriage nationwide, and the other challenges a part of the Defense of Marriage Act that denies federal benefits to married gay and lesbian couples. The latter case involves a New York City woman who was hit with a huge tax bill for property she inherited from her wife after she died. A surviving spouse in an opposite-sex marriage would not have been taxed in this situation.
Same-sex spouses also aren't eligible for other benefits, such as Social Security checks that a surviving spouse would normally receive.
The Human Rights Campaign, a Washington, D.C., civil rights organization focused on the lesbian, gay, bisexual, and transgender community, has identified 38 for-profit US companies that currently offer same-sex tax equalization benefits, all put in place since 2009. The employees of Massachusetts-based companies Bain & Co., Boston Consulting Group, and Bingham McCutchen LLP get the benefit, as do local employees of Deloitte LLP, Kimpton Hotels & Restaurants, and other companies on the group's list.
Cambridge also provides this benefit for city employees, the only municipality in the country to do so, according to the Human Rights Campaign, though Seattle is considering it.
"It's the right thing to do, and it's a fair practice, but it's also good for business," said Human Rights Campaign spokesman Paul Guequierre. "When companies are recruiting the best and brightest talent, this is one powerful way to do that."
As awareness grows and more states legalize same-sex marriage, more companies are expressing interest in offsetting the tax burden, Guequierre added.
The Boston law firm Bingham McCutchen started offering its married gay employees a tax equalization benefit last year, giving 11 of its 1,000 US employees an extra $100 a month to help make up for the additional taxes taken out.
"What we get back in good will, you can't calculate that," said Laura Lemmons, national director of benefits for the firm. "It's priceless, as they say in the commercials."
Rakhit, the Biogen Idec vice president, who is working on a drug to treat amyotrophic lateral sclerosis, or ALS, often referred to as Lou Gehrig's disease, estimates he has paid tens of thousands of dollars for this "unfair tax" since he got married in Boston in 2004. Biogen Idec's willingness to start reimbursing him for this inequity makes him realize the company is supportive of its employees' lives, he said. It also reflects a bigger shift on gay rights going on around the country.
"It's a growing realization that this is not what the US is founded on," he said. "It's equality and freedom for all, so you can't say that in one breath and then in another breath take away the freedom and equality of a certain group."