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I recently started a new position and am working on declaring/electing benefits with my employer. To my surprise this employer allows "domestic partners" to be insured for various forms of insurance (health, vision, dental, AD&D, Life, etc). I spoke with an HR representative and was told that I may elect to cover my fiance.

I see two similar, but not exact, questions on money.so. The first discusses adding legally recognized domestic partners to employer sponsored insurance plans. My fiance and I are not legally recognized domestic partners, but we have lived together for ~2 years and will get married in one year. The second question looks to be more closely related to my question, but lacking a few details I specifically want to ask about.

From the second question linked it looks like there is a tax implication to adding someone (legal domestic partner or otherwise) under your employer sponsored insurance. That is, the cost of the insurance must be taken from the employee post-tax. Which to me personally is not a big deal I think (from my understanding this should only equate to ~$100 not taken pre-tax which shouldn't result in any reasonable tax benefit if it were pre-tax).

Other than this implication, are there any general implications I should be aware of when adding someone to my employer sponsored insurance? Further, just for clarification, could someone explain the tax implication and whether there is a scenario where it may not be a good idea to add someone under your employer sponsored insurance?


Another little piece of related information. My HR representative told me if I participate in the HSA I can double the yearly contribution limit. Which to me is very welcome given I can carry that pre-tax money forever and start building it now/fast while I'm relatively young and healthy.

EDIT: Located in the USA.

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  • Are you in the US?
    – littleadv
    Commented Jun 28, 2022 at 19:42
  • Yes, located in the US. Will add to post.
    – KDecker
    Commented Jun 28, 2022 at 19:46
  • You’re not a Domestic Partner unless you fit the legal requirements for being a Domestic Partner. Right?
    – RonJohn
    Commented Jul 3, 2022 at 0:02

2 Answers 2

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From the second question linked it looks like there is a tax implication to adding someone (legal domestic partner or otherwise) under your employer sponsored insurance. That is, the cost of the insurance must be taken from the employee post-tax.

There are two tax implications:

  • what you pay for the policy from your paycheck for that extra person is post-tax.
  • what the employer pays for that coverage is counted as income for you and is taxed.

If the cost of adding a person is $300 a month and the company pays $100 of the premium, and you are in the 22% tax bracket; then at the federal level:

  • you see a $200 post-tax deduction per month for their premium.
  • you will see an extra withholding of $22 a month to cover the added income to cover the employers portion.

Of course if the company doesn't cover any of the premium there is no extra tax. In my experience some companies pay part of the premium and some don't.

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For Federal tax, these are all non-deductible. I.e.: yes, you'll pay all the costs after tax, whereas all the benefits for yourself and/or your dependents (per the IRS rules) are pre-tax. Spouse would be a dependent, but domestic partner (official or otherwise) is a stranger to you as far as the Federal government is concerned.

For HSA, similarly, you cannot double your contribution because your partner is not a qualified dependent.

For State law, things may be different, but usually only for registered domestic partners. Check your local laws.

Also, in some States common-law marriage is still a thing.

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  • Thank you, and dang about the HSA, // No common law in my state. // When you say registered domestic partner is that different from official domestic partner? // So I will always pay my cost portion pre-tax no matter whomever else is on the plan? // Is there any tax implication(s) for my fiance?
    – KDecker
    Commented Jun 28, 2022 at 21:17
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    @KDecker registered = official. If you don't have a formal domestic partnership then you're not really domestic partners in the legal sense of the term. Re your own cost - it depends on the employer, my employer for example, has different plans for singles and families, and there's no "my cost" in a family plan. It will all be after tax.
    – littleadv
    Commented Jun 28, 2022 at 22:17
  • "Spouse would be a dependent, but domestic partner (official or otherwise) is a stranger to you as far as the Federal government is concerned." A spouse is never a tax dependent, but a stranger could be your tax dependent if they lived with you, make under $4300 the whole year, and you provide more than half of their support.
    – user102008
    Commented Jun 29, 2022 at 16:08
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    @user102008, the context of the question is the taxation surrounding employer benefits. Employer benefits begin at the employee, anyone other than the employee is a dependent in the context of benefits. Federal rules do not recognize informal relationships that some employers will allow (unregistered domestic partnership in this case) that’s the context of the question and as such that’s the context of this answer.
    – quid
    Commented Jun 30, 2022 at 16:55

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