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Covering your Domestic Partner

At The Heritage Group, the cost of monthly health care premiums is shared between the Company and you as a plan participant. In general, the Company contributes 85% of this cost each month while you pay just 15%

Overview

Under federal tax law, the portion of monthly premiums that your Heritage employer pays for your coverage (and that of your spouse, child(ren) and certain dependents*) is not taxed as income. However, a domestic partner is not considered a spouse under federal law. While premiums for domestic partner coverage are the same as those for covering a spouse or family, there are two income tax implications you should be aware of:

• The portion of the premium you pay that is related to your domestic partner is deducted from your pay on an after-tax basis rather than a pre-tax basis; and,
• The premium amount your Heritage employer contributes to cover your domestic partner and/or your partner’s children is considered taxable income (i.e., imputed income) and is reported as such on your Form W-2.

Both of these will result in additional income taxes being withheld from your pay, so the cost of covering your domestic partner will have the effect of lowering your net income.

If you know your Heritage employer’s share of the cost for covering yourself and yourself plus your domestic partner,** as well as your tax rate, you can estimate the tax implications and decide if it makes financial sense to cover your partner for the year. Other factors, including plan features, will affect your decision as well.