Having health insurance protects you and your family by providing coverage for medical expenses. But what if you are in a committed relationship without being legally married? Does your partner still qualify for insurance benefits?
The answer depends on your state’s laws and your employer’s policies on domestic partner coverage. Here’s what you need to know about qualifying as domestic partners for health insurance and other benefits.
What is a Domestic Partnership?
A domestic partnership refers to two unmarried, unrelated adults who live together and share a domestic life. The individuals can be of the same or opposite sex.
Domestic partnerships are similar to marriage in terms of the commitment and financial entanglement of the couple. But unlike married spouses, domestic partners do not have automatic legal rights and protections. Their eligibility for benefits depends on where they live and who they work for.
There is no standard federal or state definition of a domestic partnership. It is not a legal status like marriage or civil union. Rather, some states and municipalities have created domestic partnership registries and laws extending certain rights to registered partners.
For example, in California, registered domestic partners have nearly all the same legal benefits as married spouses. The main exception is federal benefits like social security and veterans’ spousal benefits.
On the other hand, some states provide no protections or benefits to domestic partners. Whether you qualify depends entirely on your employer’s voluntary policies.
Registering as Domestic Partners
In places that legally recognize domestic partnerships, couples must formally register to gain rights under the law. The registration process varies but typically involves:
- Filing an affidavit declaring you meet the requirements
- Paying a registration fee
- Receiving a certificate of registration
Requirements also vary but usually include:
- Cohabiting for a minimum period of time
- Being in an exclusive, committed relationship
- Not being blood relatives
- Both being over 18 and unmarried
After registering, you may need to provide your certificate as proof to enroll partners in benefits. Registration establishes your status as domestic partners in the eyes of state and local governments.
But registration is not necessarily required for insurance and other employer-provided benefits. Private companies set their own eligibility policies.
Qualifying for Domestic Partner Insurance Benefits
Employers are not legally required to offer health insurance to domestic partners. The exception is in states and cities that explicitly prohibit excluding domestic partners from partner benefits.
Most large companies and public employers choose to offer domestic partner coverage, however. This helps attract and retain LGBTQ talent and is important to employees in unmarried relationships generally.
If an employer offers insurance to spouses, they typically must allow domestic partners to enroll as well. But they can set eligibility requirements beyond just cohabiting in a committed relationship.
Common additional requirements include:
- Cohabiting for 6-12 months
- Financial interdependence
- Joint ownership of major assets
- Power of attorney or beneficiary designations
Employers usually require proof of the relationship, such as:
- Joint mortgage or lease
- Joint bank accounts or credit cards
- Named as insurance beneficiary
- Shared household bills
These documents verify your partnership meets the employer’s definition and help prevent fraudulent claims of partner status.
Insurance carriers may also impose their own qualification rules. Overall, employers have significant leeway in setting domestic partner policies.
Taxation of Domestic Partner Benefits
A major downside of domestic partner benefits is taxation. Health insurance and other benefits provided to a legal spouse are tax-exempt. But the Internal Revenue Services (IRS) treats these same benefits as taxable income for domestic partners.
The fair market value of the company’s contribution toward domestic partner benefits will be added to your taxable wages. This applies for health, dental, and vision insurance as well as benefits like gym memberships.
You must pay federal, Social Security, and Medicare taxes on this extra income, referred to as imputed income. The taxes can add hundreds of dollars per month to your tax bill.
However, the IRS makes an exception if your partner qualifies as a dependent for tax purposes. To qualify, your partner must:
- Receive over 50% of financial support from you
- Live with you full-time
- Be a U.S. citizen or resident
Dependent partners are considered tax-qualified, and their benefits are tax-free like a spouse’s. You’ll need to provide your employer with tax documents like the Qualified Domestic Partner Coverage Certification.
Comparing Domestic Partner Options
Given the tax headaches, you and your partner should consider all health insurance options:
Employer’s Plan: Only beneficial if your employer pays a large portion of premiums or your partner is tax-qualified.
Individual Private Plans: Could be more affordable due to tax savings and federal subsidies.
One Partner’s Employer: Add partner if their employer offers domestic partner coverage.
Crunching the numbers is the only way to determine the most cost-effective route. It often makes sense to have each partner enroll individually either through their employer or the marketplace.
Other Benefits for Domestic Partners
In addition to health insurance, domestic partner benefits may include:
- Dental and vision insurance
- Flexible spending accounts
- Health savings accounts
- Life and disability insurance
- Bereavement and medical leave
- Gym and tuition discounts
Eligibility follows the same policies as health insurance enrollment. These benefits are also taxed unless your partner is a dependent.
Legal domestic partnerships may provide rights such as:
- Hospital visitation
- Medical decision-making
- Inheritance without a will
- Shared property ownership
- Child custody and support
Protections can vary even within states recognizing partnerships, so research the laws where you live.
Frequently Asked Questions
Here are answers to some common questions about qualifying for domestic partner benefits:
Do both same-sex and opposite-sex couples qualify as domestic partners?
Yes, domestic partnerships are open to both same-sex and opposite-sex couples in most cases. Some states previously limited registered partnerships to same-sex couples who couldn’t legally marry. But now eligibility is generally gender-neutral.
What if one partner is over age 62?
Some states allow opposite-sex couples to register as domestic partners if one person is over age 62. This provides benefits to older couples who do not remarry after divorce or death of a spouse. Company policies typically do not have an age requirement.
Can we enroll partners if it is not an open enrollment period?
Yes, employers and insurance companies normally allow you to add a domestic partner following a “qualifying life event” like getting into the relationship. You have 30-60 days after the change to enroll them in benefits.
Do we need to provide legal documentation of our relationship?
Typically yes, employers and insurers require proof like a domestic partnership certificate, joint bills, or joint mortgage statement. This verifies you meet the criteria to enroll a partner.
What are the tax implications if my partner enrolls in my insurance?
Unless your partner qualifies as a tax dependent, the fair market value of their coverage will be added to your taxable income. You must pay federal, Social Security, and Medicare taxes on this imputed income.
What happens if we break up? When does my partner lose benefits?
If you dissolve the relationship, you are required to notify your employer and remove your ex-partner from benefits. They immediately lose eligibility and coverage at the end of that month.
The Bottom Line
Domestic partner benefits provide important protections for unmarried couples. But qualifying criteria, legal rights, and tax implications vary greatly between states and employers.
Do your homework to understand requirements in your circumstances and weigh options to get the best coverage. An insurance agent or tax professional can also help maximize benefits for both you and your partner.
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