Question 1

Do I need a domestic partner affidavit for health insurance?

Accepted Answer

If your employer offers domestic partner health insurance, you will likely need to provide proof of your domestic partnership to add your partner to your health insurance. Depending on the employer and where you live, this can be either proof of a registered domestic partnership (meaning you’ve registered your domestic partnership with the state or local government) or proof of an employer-defined domestic partnership. Employer-defined domestic partnerships have requirements set by the employer, and can be offered by employers in areas where domestic partnerships are not recognized by the state or local government. These employers will typically require an affidavit in which the employee attests that their relationship meets the employer’s requirements for a domestic partnership.[efn_note]”Affidavit for Domestic Partnership” BenefitsLink.com. June 8, 2023 and Example of an Affidavit of Domestic Partnership. Colorado State University. Accessed June 14, 2024[/efn_note] If you buy your own health insurance, through the Marketplace or directly through an insurer, access to plan that will cover you and your domestic partner on the same policy will depend on where you live and the health plan’s rules. An insurance carrier may ask for a domestic partnership affidavit. And particularly if you’re using the registration of a new domestic partnership to obtain a special enrollment period in a state where that’s available, you should expect to have to submit proof of the domestic partnership registration.

Question 2

How do Obamacare subsidies work for a domestic partnership?

Accepted Answer

Most Marketplace enrollees qualify for premium tax credits (premium subsidies).[efn_note]”The Affordable Care Act 101” (Figure 3) KFF. May 28, 2024[/efn_note] Premium subsidies are a tax credit based on the total annual income earned by everyone in the enrollee’s tax household (everyone listed on your tax return).[efn_note]”The Premium Tax Credit – The Basics” Internal Revenue Service. Accessed June 3, 2024[/efn_note] Married Marketplace enrollees must file a joint tax return to qualify for a premium tax credit.[efn_note]”Questions and answers on the Premium Tax Credit” (Question 5). Internal Revenue Service. Accessed June 3, 2024[/efn_note] But domestic partners cannot file a joint tax return.[efn_note]”Answers to Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions” Internal Revenue Service. Accessed June 3, 2024[/efn_note] And HealthCare.gov clarifies that applicants should not count a domestic partner as part of their household unless they have a child together or will claim the domestic partner as a dependent on their tax return.[efn_note]”Count income & household size” HealthCare.gov. Accessed June 4, 2024[/efn_note] (Note that even if domestic partners share a child, they still have to file separate tax returns; either parent, but not both, can claim the child as a dependent.)[efn_note]”Answers to Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions” IRS.gov. Accessed June 14, 2024[/efn_note] Domestic partners file separate tax returns (assuming one is not the other’s tax dependent),[efn_note]”Tax Tips for Registered Domestic Partners and Unmarried Same Sex Couples in Community Property States” TurboTax. June 6, 2024[/efn_note] and Marketplace premium tax credits are linked to an enrollee’s tax return. If both domestic partners filing separately are covered under one Marketplace policy, the premium tax credit can be allocated across both partners’ tax returns in any way they choose, or all of it can be reconciled on one partner’s tax return. The IRS explains the allocation of premium tax credits in the instructions for Form 8962, which is used to reconcile Marketplace premium tax credits after the coverage year is over.[efn_note]”2023 Instructions for Form 8962” Internal Revenue Service. Accessed June 3, 2024[/efn_note] (To clarify, IRS rules for allocating premium tax credits are applicable in any situation where two or more tax households share a single Marketplace policy. That will typically be the case if domestic partners are allowed to enroll in one policy together, as domestic partners will file separate tax returns unless one is able to claim the other as a dependent.)

Question 3

What is the domestic partner health insurance tax?

Accepted Answer

The domestic partner health insurance tax refers to the fact that the tax treatment of employer-sponsored health insurance isn’t the same for domestic partners as it is for spouses, it is not an actual tax imposed on domestic partnerships. One of the benefits of employer-sponsored health insurance is that the premiums are typically paid on a pre-tax basis for the employee, their spouse, and their tax dependents. The portion of the premiums the employee pays is deducted from their paycheck before taxes are calculated, and the portion that the employer pays is not considered taxable compensation for the employee.[efn_note]”Key Elements of the U.S. Tax System” Tax Policy Center; Urban Institute and Brookings Institution. Accessed June 4, 2024[/efn_note] But the rules are different for domestic partner health insurance (unless your domestic partner is your tax dependent, which is possible only if their income is very low and they meet other IRS requirements).[efn_note]”Claiming a Domestic Partner as a Dependent” Intuit Turbotax. Mar. 28, 2024[/efn_note] Assuming your domestic partner cannot be claimed as your tax dependent, their coverage under your employer-sponsored health plan cannot be provided on a pre-tax basis. Instead, the fair market value of their health benefits is counted as taxable income for the employee.[efn_note]”Considerations for Domestic Partner Coverage in Employee Benefits” EPIC Insurance Brokers & Consultants. Sep. 30, 2022[/efn_note] The tax treatment of domestic partner health insurance is an important consideration to keep in mind when deciding whether to add your domestic partner to your employer’s health plan. The fact that the value of the coverage will be added to your taxable income might mean that it makes more sense for your partner to obtain their health coverage elsewhere. (To clarify, the portion that’s payroll deducted will not be paid with after-tax dollars and the portion that the employer pays – if any – will be subject to income tax and FICA tax.)[efn_note]”Considerations for Domestic Partner Coverage in Employee Benefits” EPIC Insurance Brokers & Consultants. Sep. 30, 2022[/efn_note] The specifics will depend on your tax bracket, the fair market value of the domestic partner's health insurance, and the other coverage alternatives available to your partner. You should consult a tax advisor or other trusted professional if you have questions or want guidance on your specific circumstances.

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Domestic partner health insurance: a coverage option for unmarried couples