Covering a Partner
Goods news, bad news
1
Here’s why….
Good news:
The IRS allows CMH to let its
employees cover domestic partners
Bad news:
The IRS dictates less favorable tax
treatment when covering partners
2
How is a Partner defined at CMH?
1.
2.
3.
4.
5.
Sole domestic partner (same sex or
opposite sex)
At least 18 years old
Not related by blood
Not legally married to someone else
You must provide proof of domestic
relationship (see next slide)
3
How do I prove relationship?
You must provide:
Evidence of civil union, or
At least three of the following:
1.
2.
a)
b)
c)
d)
e)
f)
g)
Joint lease, mortgage or deed
Joint ownership of a vehicle
Joint checking/savings bank account
Designation of partner as beneficiary on your life
insurance
Designation of partner as beneficiary in your will
Shared household expenses
Partner holds power of attorney for healthcare
4
When is partner coverage the
same as spousal coverage?
1.
The coverage for a qualified partner
mirrors spousal coverage for the
following two items:
a)
b)
Dependent life insurance
Beneficiary
5
When is partner coverage
different than spousal?
1.
2.
3.
4.
Premiums are handled differently for
medical, dental and vision coverage
COBRA is not offered to partners
Partner expenses may not be submitted
to your Healthcare Spending Account
reimbursement
Partner’s children’s daycare expenses
may not be submitted to your DCSA.
6
How are premiums calculated?
The federal government mandates that the
portion of the premium that relates to the
partner cannot be taken “pre-tax”
So, if the cost for “employee only” coverage
is $50 biweekly and the cost for “employee
and family” is $200 biweekly, $50 comes
out pre-tax and $150 comes out after-tax
7
What is Imputed Income?
Per the IRS:
1.
2.
3.
If CMH pays more toward a contract because the
employee is covering a partner, the employee must be
taxed on that additional amount.
So, if CMH pays $200 biweekly toward an “employee
only” contract and $500 biweekly toward an “employee
and family” contract, the employee must be taxed on
the additional $300 biweekly.
This is handled by, in effect, giving the employee a
$300 taxable bonus biweekly then taking out $300 as
an “after tax” deduction. This will increase the
employees taxable earnings on the W-2 form.
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