Bill Extends Employer Health Insurance Tax Breaks to Domestic Partners

June 7, 2007 ( - Two U.S. Senators have introduced a proposal that would end the tax treatment disparity between employer-sponsored health coverage for domestic partners of employees and that of spouses and dependent children of employees.

According to a press release from the Human Rights Campaign, The Tax Equity for Domestic Partner and Health Plan Beneficiaries Act would amend the Internal Revenue Code of 1986, which excludes from income the value of insurance premiums and benefits received by employees for coverage of an employee’s spouse and dependents, but does not extend this treatment to coverage of domestic partners.

As a result, employees are taxed on the coverage provided to their partners, but have no additional income to cover the tax. In addition, the value of domestic partner benefits is included in the employee’s wages for the purpose of calculating payroll taxes, increasing both the employee’s and the employer’s payroll tax obligations, according to the press release.

The bill was introduced in the U.S. Senate by Senators Gordon Smith, (R-Oregon) and Joseph Lieberman, (I.-Connecticut).

The House bill, Tax Equity for Health Plan Beneficiaries Act of 2007 ( H.R. 1820 ), was introduced by Representative Jim McDermott (D-Washington).