Domestic Partners and Health Insurance

sguevara

[B]HELP!!![/B] is there anyone out there who understands the nuiances of how employees should be taxed for their domestic partners health coverage. Is there a formula? A place I can go and get GOOD information? With each piece of literature I read, the more confused I become and I USE to think I was relatively intelligent.

ACU Frank

I've not had to deal with domestic partner coverage... I guess I didn't realize there were any tax implications.

plynnl

We have domestic partner insurance but employee is responsible for the premiums. I don't know of any tax implication.

NaeNae55

IF you have a health insurance program which covers domestic partners and they are NOT legally considered spouses or qualified IRS dependents, then you treat the company's cost difference between single coverage and the cost of covering the domestic partner as taxable income.

Example (using traditional health insurance): A single employee pays $100 and the company pays $200 (total insurance cost is $300) per month. Coverage for employee plus one is $200 for the employee and the company pays $500 (total insurance $700) per month. The taxable benefit to the employee is $300 ($500-$200) per month. If the couple is legally married there is no taxable benefit. If the covered dependent is a IRS qualified dependent there is no taxable benefit. (You might want to check out the irs.gov website and download Publication 15B Employer's Guide to Taxable Fringe Benefits and check it out yourself.)

You should have a method for adding taxable benefits in your payroll system.

Good luck!

Nae

sguevara

Nae,
Thanks. I have spent all day today searching the web and FINALLY think i found some useful, easy to understand information that actually gives you different scenarios - including what if the ee has family coverage (which I was having a HARD time finding).

Sharon