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For Same-Sex Couples, Love Ain’t Cheap

They say the best things in life are free. Being with a partner you love is certainly one of the best things in life, but, if you happen to be gay, it’s far from free.

Two New York Times writers, Tara Siegel Bernard and Ron Lieber, recently attempted to calculate the price of being gay in America. While they acknowledge that the emotional costs of fighting prejudice are incalculable, they wanted to see if they could put a number amount on the concrete dollars and cents costs.

Their hypothetical couple consisted of two women living in New York state. They commit to one another at age 35, have two children, and remain together until one woman dies at age 81.

The Times writers, with the aid of tax professionals and financial planners, considered two scenarios. In the first, both women earned $70,000, except during a five-year period when one stayed home with their small children. In the second, one woman $110,000 and the other earned $30,000.

After everything was added up, the researchers found that, after a 50-year period encompassing birth and death, the surviving partner in the equal income, same-sex scenario would be $41,196 poorer than a similar circumstanced person who had married someone of the opposite gender. In the disparate income scenario, that number jumped to $467,562.

One of the main culprits was health insurance. This was also a major factor in the difference between same-sex couples with equal earnings and those with different earnings. While some insurance plans cover domestic partners, many do not, meaning that, unless both partners receive employer-provided health care, one partner must purchase coverage individually. Even when a plan covers domestic partners, federal tax laws usually penalize the spouse whose employer provides health benefits. This is one of the worst side effects of the federal Defense of Marriage Act, which denies even married same-sex couples the benefits that opposite-sex couples enjoy.

The writers assumed that, in the disparate incomes scenario, the lower earner’s job did not provide health insurance. Not being able to take advantage of spousal benefits ratcheted up the couple’s health care costs by $211,993.

Another potentially huge cost comes from estate taxes. While heterosexual couples who are U.S. citizens can transfer an unlimited amount of assets to each other during their lives and at death without paying gift or estate taxes, same-sex couples, even married ones (again, thanks to the Defense of Marriage Act), receive no such privilege. Most couples do not need to worry about estate taxes since their assets don’t exceed state or federal exemptions. Federal estate taxes apply only to estates larger than $3.5 million, and estate taxes for New York, where the imaginary couple lived, kick in at $1 million. But for affluent couples whose assets exceed these thresholds, the cost could be enormous. Assuming the higher-earning partner in the disparate incomes scenario died first, that couple would avoid the federal tax but pay $43,378 to New York State.

According to the writers, same-sex couples also fare worse than their heterosexual counterparts when it comes to social security, pensions and spousal I.R.A.s. Additionally same-sex couples must pay more for tax preparation, since they cannot file jointly, and for financial planning, since they must create a number of documents to replicate the protections and rights automatically accorded to married opposite-sex couples. The study put these additional costs at $12,300 for tax preparation and up to $5,500 for other paperwork.

Nearly all of the costs mentioned by the writers, excluding the increased expense of having biological children, are a direct result of the fact that same-sex unions are not given the same treatment that is available to heterosexual couples.

The federal government’s discriminatory law was enacted in 1996, years before any state actually permitted same-sex marriage. Thousands of gay couples have been wed since Massachusetts became the first state to permit same-sex marriage in 2004 (discounting Vermont’s early attempt at civil unions, which began in 1999). The sky has not fallen. Wedding planners remain in business, and the institution of marriage seems to need no defense. So, maybe, political maturity will eventually lead to the law’s repeal. More likely, the Supreme Court will at some point feel compelled to take up the issue.

In the meantime, gay couples will keep on paying the price for love. Now they know just how much that is.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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