After gay marriage was legalized, some companies stopped offering benefits for unmarried couples. What are your options if you’re in a domestic partnership, gay or straight, but haven’t tied the knot?
I know a lot of happy, committed couples, some with children, who don’t see any need to “put a ring on it” and pronounce themselves husband and wife, wife and wife, or husband and husband (whichever the case may be). For some, a domestic partnership seems a good alternative.
What is a “domestic partner” anyway?
Some companies (especially large ones) have for many years offered domestic partner benefits (such as health insurance plans) to unmarried couples, similar to the spousal benefits available to married couples. But who actually qualifies as a domestic partner? The clue is in the word “domestic;” however, a joint lease and joint bank account statement may not be enough to prove that your partner is eligible. Ask your HR or benefits department what their eligibility criteria are: Do you have to have lived together for a certain number of years? What happens if your relationship ends and how does that affect benefits? The way your employer’s benefits program defines domestic partner may be altogether different from that of another employer’s. There are no blanket rules; it varies from place to place.
What if my employer does not offer domestic partner benefits?
Before the legalization of same-sex marriage, domestic partner benefits were the only way for gay people to extend their insurance coverage to their partners. While states such as California and Oregon have their own laws protecting the rights of domestic partners, there has never been a federal law mandating employers to provide domestic partner benefits. Because it is now legal for anyone to marry, regardless of their partner’s sex, some companies are choosing to end their domestic partnership benefits program, since all spouses are covered under the traditional benefits plan. If you are unmarried, talk to someone in HR and let them know how much this benefit matters to you. Remember, most large companies want to stay competitive and attract the best talent; offering an inclusive benefits package is a key part of that.
Domestic benefits vs. spousal benefits
As with the civil rights movement, social attitudes often have to change before the law does. The IRS recognizes certain spousal benefits while those of a domestic partner are not recognized. Employer contributions to health premiums for a domestic partner are considered taxable income; this is not so for married couples. Benefits are only not considered taxable income if the domestic partner qualifies as a dependent, which means the employee supplies more than half of his or her financial support.1 Talk to your CPA (Certified Public Accountant) or other tax professional for further clarification.
So even if you and your non-dependent, non-married partner are eligible for employer benefits, you may still be at a disadvantage, financially speaking. Matrimony is a serious commitment for most couples, and should be entered into for reasons far more exalted than financial gain. For any domestic partners who are planning to one day have a big, beautiful wedding, be sure to pop open a separate bottle of champagne in celebration of the tax advantages you may both enjoy.
1 IRS Information Letter 2016-0008, February 17, 2016 https://www.irs.gov/pub/irs-wd/16-0008.pdf