Monday, June 13, 2011
June 13—Bipartisan bill would provide equal tax treatment of health benefits for domestic partners.
On June 9, Senators Charles Schumer (D-NY) and Susan Collins (R-ME) introduced the “Tax Parity for Health Plan Beneficiaries Act of 2011,” a bill which would provide for the equal tax treatment of health benefits provided to domestic partners. The bill is co-sponsored in the Senate by Senators Sheldon Whitehouse (D-RI), Jeff Bingaman (D-NM), Sherrod Brown (D-OH), Maria Cantwell (D-WA), Patty Murray (D-WA), Richard Blumenthal (D-CT), Kirsten Gillibrand (D-NY), Jeff Merkley (D-OR), Frank Lautenberg (D-NJ), Ron Wyden (D-OR), and Al Franken (D-MN). In the House, a companion bill has been introduced by Reps. Jim McDermott (D-WA), Richard Hanna (R-NY), Earl Blumenauer (D-OR), and Nan Hayworth (R-NY).
Under current law, when a company provides health benefits to an employee's spouse and dependents, the value of the entire premium is considered a tax-free fringe benefit. However, if the company elects to offer a health plan that covers a domestic partner, the partner's portion of the insurance premium is treated as taxable income. The bill—which would not compel any businesses that doesn't already offer health coverage to domestic partners to do so—would amend the Code so that all same-sex and opposite-sex domestic partners who are covered by their partner's employer-based health plan are no longer treated differently.
A press release on the bill issued by Schumer and Collins noted that when a gay or lesbian worker calculates his or her payroll tax liability, the value of the coverage provided to their domestic partner is included in their wage base. That serves to increase both the employee's and employer's payroll tax obligations. The press release further noted that more and more employers are making the business decision to voluntarily provide health benefits to the domestic partners of their employees. As of Mar. 2011, 291 of the Fortune 500 companies, or 58%, were providing such coverage, more than thirteen-fold increase since '95.
Posted by www.irstaxattorney.com at 7:16 AM