Domestic Partnership and Health Insurance
Since one of the easiest ways for many people to find affordable health insurance is through their spouse’s employer-based group coverage, you may be wondering what rights, if any, you have to share in your partner’s health insurance benefits if you are not married. The answer is somewhat complicated, so we have tried to break down this tricky subject as much as possible.
What is Required under Federal and State Law
The short answer is that private employers are not required to offer health insurance to any employees or their domestic partners. However, if an employer chooses to offer health insurance, it must comply with federal and any applicable state law.
Currently, federal law does not require employers to extend health benefits to domestic partners, however, some (though not all) states require employers who offer benefits to include domestic partners. Massachusetts, Connecticut, Iowa, Maine, and Vermont currently recognize same-sex marriages and provide couples with the same rights as traditional married couples. New Hampshire and New Jersey have legal unions for same-sex couples that provide all the rights and responsibilities of marriage under state law. The District of Columbia, Hawaii, Oregon and Washington offer legal unions for same-sex couples with varying subsets of the rights and responsibilities of traditional marriage.
In addition to state laws which recognize domestic partnership as equivalent to marriage, some states mandate equal insurance coverage for domestic partners. Although California voters passed Proposition 8 which restricts the definition of marriage to opposite-sex couples, the California Insurance Equality Act requires companies with a group policy that provides benefits to spouses to provide the same benefits to domestic partners. The act also prohibits employers from asking for more proof of partnership of domestic partners than they ask of spouses.
In addition, in November 2008, the New York Insurance Department issued a bulletin to insurers requiring them to recognize same-sex couples who enter into valid marriages outside of New York as married couples for purposes of New York insurance law, including for purposes of health insurance benefits. As a result, if you live in New York and have group health insurance which extends benefits to spouses, your insurer is required to allow you to add-on your same-sex spouse.
Although they are not required to do so, some employers choose to extend health insurance benefits to domestic partners anyway, whether out of sense of fairness, to attract more diverse employee candidates, or for some other reason. Please note that because of concerns regarding potential fraud by insurers, many employers who do offer coverage to domestic partners will require detailed proof of domestic partnership before beginning coverage.
It is also worth noting that some employers who do choose to extend health insurance benefits to same-sex domestic partners do not extend the same benefits to heterosexual domestic partners on the grounds that heterosexual couples have the legal option of marrying.
However, in a minority of states (including Texas), you may qualify as a common law marriage. If you do fulfill the requirements of common law marriage (which are usually cohabiting for a period of time, holding yourselves out as husband and wife, and treating your relationship as a committed one), it must be honored the same as any other marriage, including qualifying for any benefits legally applicable.
Before you go running off to register your common law marriage, keep in mind that like any other legal marriage, the only ways to end it are through death, annulment and divorce, so be aware of all the legal implications.
Major insurance carriers that will provide health insurance benefits to domestic partners include: Ameritas, CIGNA, Aetna, Kaiser Permanente, United HealthCareGroup, MetLife, Great West Life, Humana, Mutual of Omaha, Guardian and some Blue Cross Blue Shield plans. The San Francisco Human Rights Commission maintains a database of insurance carriers who provide health insurance benefits to domestic partners: http://mission.sfgov.org/hrcdpip/.
Unfortunately, regardless of what your employer/insurance carrier offers and what your state law requires, federal law and the Internal Revenue Service do not recognize domestic partnerships. Because of this, even if your domestic partner is covered by your insurance and your state recognizes your partnership, your domestic partnership’s health insurance benefits will not be taxed the same way as an opposite-sex married couple’s health insurance benefits.
As a result, under federal tax law, if your employer provides health insurance benefits to your spouse or dependents, the IRS allows you to exclude those benefits from your taxable income. However, if your employer provides those same health insurance benefits to your domestic partner, you must include the fair market value of those benefits as “imputed income” in your taxable income. In addition, you cannot use pre-tax dollars to pay for your domestic partner’s coverage, so you cannot enjoy the full benefits of a Flexible Spending Account, Health Reimbursement Account or Health Savings Account. The only exception to these tax requirements is if your domestic partner qualifies as a dependent under IRS requirements.