Love. Health Insurance. Taxes.

by Brigette Courtot, Policy Analyst
National Women’s Law Center

This post is part of a weekly series on Women and Health Reform.

Oh, the things we do for love. Why else would I agree to sushi when I’d rather have Thai, tune into NPR’s “Car Talk” even though it bores me to tears, and get out of bed to investigate midnight noises that — as a heavy sleeper — I would normally snore straight through? I do these things because they are part and parcel of being in a committed relationship, and because they make the person that I love feel happy and safe. This makes sense, no?

Our current health insurance system recognizes — and even promotes — this desire to provide for and protect our loved ones in some important ways. First, most employers offer health insurance to their employees’ family members, as part of their overall compensation package. In addition, the employee doesn’t pay taxes on the health benefits that the employer gives their family members. For workers, this is a good deal all around — benefits for the people they care about, and no taxes. Still making sense, right?

Unless, of course, you aren’t married to that person that you love. Workers with unmarried domestic partners (whether same- or opposite-sex) can pretty much kiss that good deal goodbye. They should consider themselves lucky if their employer even offers health insurance coverage for their partner — about three out of four American employers don’t. If they beat those odds and are fortunate enough to work at a place that does offer partner benefits, they’ll find that (unlike their married co-workers) their loved one’s coverage is taxed as part of their income. Same committed relationship. Same health benefits. Unequal taxes. This is where things stop making sense.

I happen to work for an organization that will cover my domestic partner — the aforementioned light sleeper who loves sushi and Car Talk — despite the fact that the unequal tax treatment provides a disincentive for them to do so. [In other words, employers pay more in payroll taxes when they cover partners versus other family members, since partner coverage counts as employee income.] For this, I am glad. But the taxes, well, that’s another story. As a worker with a domestic partner, I pay an average of $1,069 more per year in taxes than my married counterparts with the same coverage. This little gem of knowledge makes filing my income taxes just that much more enjoyable. (Note that I’m referring to the federal income tax here. A few states do exclude the value of partner benefits from their state income tax but the majority follow the federal lead on tax policy.)

At last count, there were nearly six million Americans living as unmarried couples, and these individuals were two to three times more likely to have no health coverage than their married counterparts. As we grapple with how to expand coverage to the swelling ranks of the uninsured, why are we making it more difficult and more expensive for millions of hardworking Americans to get employer health benefits for the people that they care about? In a nation that claims to promote both good health and equality, unequal taxation of domestic partner health benefits sets us back on both counts.

Comments

[Toronto life insurance broker]

Interesting point. This policies depend on government. If they are conservative, they are folowing conservative line by promoting traditional way of life - that means marriage too. It's just question for voters, if they are satisfied with it or not. Insurance companies (I am dealing with Life insurance in Canada) usually don't make such discrimination at all.