ARE THERE ANY IMPLICATIONS FOR COVERING DOMESTIC PARTNERS?

The Internal Revenue Code does not usually classify domestic partners as dependents; an employee is required to be taxed on health benefits provided to a domestic partner that does not fit the definition of a dependent according to §152(d) of the IRC. Due to this requirement, the value of the coverage is taxable to the employee and is considered “imputed income”. Full value of coverage is included in the employees’ pay as taxable wages, meaning Federal income tax, FICA, State and other payroll taxes are withheld, and reported to the employees W-2. The same is applicable to children of domestic partners, unless they are considered the employee’s dependents in accordance to §152 of the IRC.