Friday, March 23, 2007

Did James Ramsey tell the truth?

U of L Pres. James Ramsey told a House committee his university does not subsidize domestic partner benefits. Why is he telling state lawmakers one thing, and his employees something completely different?

In the debate over domestic partner benefits at Kentucky’s public universities, one alleged fact has been hammered home by proponents again and again: that no taxpayer money was being used by the University of Louisville to subsidize the benefits. Legislators have relied on this fact in arguing for it, and U of L’s own Board of Trustees relied on it in making their decision to approve the university’s plan. But new information is calling into question whether the university is being truthful in its statements to state lawmakers and the public.

During House Health and Welfare Committee testimony on March 6, University of Louisville President James Ramsey testified that his university did not subsidize its employee health insurance plans of domestic partners. U of L officials have maintained since last year, when it instituted its domestic partner benefit plan, that no taxpayer or tuition money was involved in their decision, since the cost of their health benefits was borne solely by employees.

That testimony was the chief point of controversy for many of the committee members. Representative Bob Damron (D-Nicholasville) tried to clarify the matter during Ramsey’s testimony:
Damron: You mentioned that there is no cost to the university. Is your health insurance plan structured such that the dependents, spouses, children and so on that are added to your plan are purely a pay as you go basis or is there any subsidy? Most state plans have a subsidy that helps to pay part of the family plan or at least a piece of it or buys the cost of participating in a family plan. Are you stating that the University of Louisville pays for the single policy but they don't subsidize in any shape form or fashion adding additional people to the plan?

Ramsey: As I indicated to you I pay for my dependents health insurance

Damron: That's not the question. The question is are you partially subsidizing the cost of a family plan? The state of Kentucky partially subsidized the cost of the family plan. Is the University of Louisville not partially subsidizing the cost of their family plan?

Ramsey: No. Are you talking about on an actuarial basis?

Damron: On an actuarial basis.

Ramsey: The actuaries told us no we are not.
Damron continued to press the issue, and pointed out that he didn’t think the numbers added up. Again Ramsey affirmed that U of L did not subsidize their plan:
Damron: I guess in my own mind, I’m having a hard time figuring out how you could do that at half the cost of what the state employee’s were paying for their family plan.

Ramsey: Do you want us to follow the state plan? [laughing]

Damron: No, I want to make sure that before you make a statement, before a committee of the General Assembly, that you are accurate in what you say.

Ramsey: Bob, you’ve known me for a long time, and I’ve always been honest with the General Assembly.

Damron: I’m not saying you’re not honest. I’m just saying I think you need to look at that issue before you make statements like that.

Ramsey: What I’m telling you is what I’m telling you.
A few minutes later, Rep. Darryl Owens (D-Louisville) brought up the matter again, just to make sure:
Owens: That does not change the fact of your testimony which is that the university does not subsidize. Is that correct?

Ramsey: Correct.
Maybe I'm mistaken, but I think Ramsey is saying that Uof L doesn't subsidize its benefits. But there's one little problem: the health care section of U of L’s own website indicates exactly the opposite.

Not only does it say they are subsidizing family benefits, but the new part of the site dealing with domestic partner benefits says quite clearly that the university is subsidizing benefits for domestic partners. According to the website page dealing with domestic partners:
Whether or not your domestic partner qualifies as a tax dependent,” says the site, “makes a difference in how taxes will be deducted from your paycheck for benefits. IRS does not allow pre-tax treatment for any dependents that don't qualify as your tax dependent. Therefore, if that's the case, you will be taxed on the money you spend through payroll deduction as well as the money U of L spends for your domestic partner and his/her children.” [Italics added]
In the same section, it goes on to say that the university pays the same amount for an employee and domestic partner as with an employee and spouse.
You will see that the university contributes the same amount in both situations, but the differences in the tax treatment will make a difference in your net take-home pay.” [Italics added]
Now I could be mistaken again, but this seems to say that the University of Louisville is subsidizing the benefits.

The site goes on to show an example of the employee’s paycheck with the benefit for the domestic partner under the label “Employer Paid Benefit.”

In other words, the university’s own website would appear to directly contradict President Ramsey’s unequivocal testimony before the committee. If U of L is not subsidizing the benefit, then how can employees report to the IRS that it is?

It is beginning to look like President Ramsey owes state lawmakers—and his own Board of Trustees—an explanation of why he is telling them one thing while his university is telling its employees something completely different.


SPorcupine said...


I don't think the U of L site is describing a subsidy from U of L.

My husband chooses an amount each year for his employer to set aside for medical expenses. The tax collectors treat those dollars as never being in his paycheck. As a result, what we spend for our daughter's allergy medicine and our son's braces is never subject to tax, and we save a nice bit of money. The federal, state, and local governments all do without the taxes we'd otherwise pay.

We use a similar plan to pay the "employee share" of the costs of the family medical insurance his employer provides. His pay is reduced and the dollars taken out are never taxed--so they buy more.

I think the U of L site is describing the possibility of some employers being able to get the same treatment for the amount that comes out of their pay to cover health insurance for domestic partners.

I think it says that IF the IRS accepts the partner as a dependent, THEN the employee can pay for the partner's benefits in pre-tax dollars. The savings then comes from reduced taxes, not from U of L as employer.

When can a domestic partner be a tax dependent? I'm confident that it is a fairly rare situation of true financial dependence.

Martin Cothran said...


I think I understand what you are saying, but I don't see how it bears on the question of whether the benefit is being subsidized. You are discussing whether a health benefit is to be considered as a before-tax benefit, and when it is to be considered an after-tax benefit. But that is not relevant to whether the benefit (whether it is considered a before or after-tax benefit) is subsidized by the university.

The website makes a clear distinction between the amount the employee "you [the employee] spend," that is the employee contribution, and "the money U of L spends for your domestic partner and his/her children," that is what U of L subsidizes.

Contrary to Ramsey's testimony, according to the site, U of L subsidizes both spouses and domestic partners equally. All that section of the website is discussing is how you have to treat the two situations differently in regard to whether the benefits (both employee contribution and university subsidy) are considered before or after tax. In the case of an employee with a spouse, both the employee contribution and the university subsidy are considered before tax money. In the case of an employee and domestic partner, only the amount the employee would otherwise have paid as an single employee can be considered as before tax income: the amount of the employee contribution for the domestic partner and the amount the university subsidizes for the domestic partner is considered after tax.

If you look on the sample paychecks on the website for both an employee and spouse, and for the employee and the domestic partner, you will see this very clearly. In both cases, the employee contribution is $455.44, and the university subsidy is $460.33. The only difference is what part of the total benefit amount ($915.77) is considered before tax and what part is considered after tax.

But it's still a subsidy.

SPorcupine said...

The university's contribution looks to me like the cost of the employee's coverage, not the cost for anyone living with the employee. That's why, in the benefits schedule at, the employee only pays $50 for the employee's own coverage.

So why is there a lower charge for the second person on the plan (just a little lower)? I agree that it could be a subsidy. It's small enough that it could also be because there are paperwork efficiencies, or because people live healthier when they don't live alone

That's something I'd ask an actuary. President Ramsey was careful to say the actuaries say there isn't a subsidy, rather than that he had personally checked the numbers.

Martin Cothran said...


I see what you are saying. I agree that we can't determine which part of the "Employer Paid Benefit" is the employee's subsidy and which is part is the spouse's/domestic partner's. But it seems we at least know:

1. That U of L does subsidize something, since it references "money U of L spends for your domestic partner and his/her children"; and

2. It appears to be at least $68.18 per month which is labeled "Dom Part" under the "Employer Paid Benefit".

I suppose we would need the pay stub for an employee who only covers himself to tell.

Anonymous said...


It is apparent that you have spread your misinformation to someone who really knows what she is talking about.

You get so few comments on this blog that I am sure you are surprised to get a real question from a real person who presents a real idea to you that does not fit easily into your little safe box of responses.

Give it a rest Martin-- neither you nor Bob Damron will be able to undo domestic partner benefits based upon the economic viability of it.

The only reason you are opposed to this is your need to justify your salary and the gullibilty of Ky'ians who think you know what you are doing.

solarity said...

"You get so few comments on this blog that I am sure you are surprised to get a real question from a real person who presents a real idea to you that does not fit easily into your little safe box of responses"

Cothran is one of just a few remaining "original thinkers" who continue to man the barricades against the dismally PC media in KY. Thank god for him!

Martin Cothran said...


Misinformation? See today's press release.