Domestic Partners – California

Effective January 2, 2005 employers in California are required to offer domestic partners the same benefits as legal spouses.  These partners are defined as same sex partners unless one of the partners is at least age 62, when same or opposite sex partners are included.  For further details, you may want to visit the website of the California Secretary of State,  at http://www.sos.ca.gov/dpregistry/.    This raises several questions, including how this can be done while still complying with Federal tax laws, COBRA laws, etc.

Domestic partners who are legally registered with the State of California are specifically included in the law, but most insurance companies will continue to offer coverage for same and opposite sex partners who share financial obligations and meet the criteria outlined in the specific forms provided by that carrier.  If your plan does not now include coverage for domestic partners, this may change at your next renewal date.

If your practice is to pay any part of the premium for spouses, your company will need to pay the same portion of the premium for domestic partners.  If employees pay the premium for spouses, they will pay the same amount for a domestic partner.  HOWEVER, if your business is paying premiums for domestic partners, the amount of premium paid is considered income to the employee under federal tax laws, and you’ll need to include that premium in the taxable income of the employee when W-2 forms are prepared.  The employee contribution for spouse premiums may be taken out of paychecks on a pre-tax basis through your Section 125 plan.  Federal guidelines, however, do not allow domestic partner premiums to be run through your Section 125 plan.  Obviously, equal does not mean equal in terms of the tax laws, yet.

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