Since tax season has started, over here at the MyHealthCafe.com blog we wanted to send out a tax season reminder to all of our followers who cover their domestic partner’s health insurance through their employer-based health insurance benefits.
Because federal law and the Internal Revenue Service do not recognize domestic partnerships, if your domestic partners receives health insurance through your employer-based health insurance benefits, those health insurance benefits are not taxed the same way as an opposite-sex married couple’s health insurance benefits.
Under federal tax law, if your employer provides health insurance benefits to your opposite-sex 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 use your Flexible Spending Account, Health Reimbursement Account or Health Savings Account to cover your domestic partner’s healthcare expenses. The only exception to these tax requirements is if your domestic partner qualifies as a dependent under IRS requirements.
If you need help with computing the fair market value of your partners’ health insurance benefits, your human resources department should be able to help you.
For more information about domestic partnerships and health insurance benefits, visit MyHealthCafe.com at:
- Tax Season Reminder: Health Insurance Benefits and Domestic Partners
- Healthcare Reform and Domestic Partners: No Changes to Taxes on Health Insurance Benefits
- Tax Season Reminder: The Small Business Health Insurance Tax Credit
- Open Enrollment Season Is Coming! Can You Move To a More Affordable Health Insurance Plan?
- Tax Season Reminder: Paying for Medical Expenses with a 401(k), IRA or Other Qualified Retirement Plan