Content of the material
- MODEL B: DOMESTIC PARTNERSHIP POLICY FOR BUSINESSES
- 1. Domestic Partners.
- 2. Definitions.
- 3. Ending Domestic Partnerships.
- 4. Notice the Partnership has ended.
- 5. Effect of Domestic Partnership.
- Q6. If a taxpayer adopts the child of his or her registered domestic partner as a second parent or co-parent, may the taxpayer (“adopting parent”) claim the adoption credit for the qualifying adoption expenses he or she pays to adopt the child?
- Q25. If a registered domestic partner is self-employed and pays health insurance premiums for both partners out of community property funds, are both partners allowed a deduction under section 162(l) (deduction for self-employed health insurance)?
- Employers and Domestic Partner Benefits
- The Role of Gender in Domestic Partnerships
- Do Domestic Partner Benefits Cost an Employer More Money?
- What If Your Employer Doesn't Offer Benefits for Domestic Partners?
- Can You Ask Your Employer to Add Domestic Partner Benefits?
- Different rules for different places
- How Can You Add a Partner to Your Health Plan?
- Get in touch
- What are the drawbacks?
MODEL B: DOMESTIC PARTNERSHIP POLICY FOR BUSINESSES
For use by businesses, universities, and other institutions when a benefits or recognition system needs a detailed definition of domestic partnership.
1. Domestic Partners.
Domestic Partners are two adults who have chosen to share one another’s lives in an intimate and committed relationship of mutual caring. The requirements to be domestic partners are:
- the two must live together;
- the two must agree to be jointly responsible for each other’s basic living expenses during the Domestic Partnership;
- neither person may be married or a member of another domestic partnership;
- the two must not be related in a way which would prevent them from being married to each other;
- both must be over 18;
- neither person had a different domestic partners in the previous six months (this requirement does not apply if the partner died)
- the two must sign a Declaration of Domestic Partnership.
“Live Together.” “Live together” means that two people share the same place to live It is not necessary that the legal right to possess the place be in both of their names. Two people may live together even if one or both have additional living places. Domestic Partners do not cease to live together if one leaves the shared place but intends to return.
“Joint Responsibility for Basic Living Expenses.” “Basic living expenses” means basic food and shelter. It also means the cost of medical care if a partner is receiving health care benefits because of the domestic partnership. “Joint Responsibility” means that each partner agrees to provide for the other partner’s basic living expenses if the partner is unable to provide for herself or himself. Anyone to whom these expenses are owed can enforce this responsibility.
“Declaration of Domestic Partnership.” A “Declaration of Domestic Partnership” is a statement signed under penalty of perjury. By signing it, the two people swear that they meet the requirements of the definition of domestic partnership when they sign the statement. Each must provide a mailing address.
3. Ending Domestic Partnerships.
A Domestic Partnership ends when:
- one partner sends the other a written notice that he or she has ended the partnership; or
- one of the partners dies; or
- one of the partners marries or the partners no longer live together.
4. Notice the Partnership has ended.
When a Domestic Partnership ends the partner/employee (or if that partner has died, the surviving partner) must sign a notice saying that the partnership has ended and give it to the employer. The notice must be dated and signed under penalty of perjury. The notice must be sent within 60 days of the end of the partnership. If the employer or any benefits provider suffers loss as a result of failure to send this notice, it may sue the partner who was obliged to send it for actual loss. The partner who signs the notice must send a copy to the other partner. Failure to give the notice will neither prevent nor delay ending the Domestic Partnership.
5. Effect of Domestic Partnership.
The obligations of domestic partners to each other are those described in the definition. If a domestic partnership ends, the partners incur no further obligations to each other.
Q6. If a taxpayer adopts the child of his or her registered domestic partner as a second parent or co-parent, may the taxpayer (“adopting parent”) claim the adoption credit for the qualifying adoption expenses he or she pays to adopt the child?
A6. Yes. The adopting parent may be eligible to claim an adoption credit. A taxpayer may not claim an adoption credit for the expenses of adopting the child of the taxpayer’s spouse (section 23). However, this limitation does not apply to adoptions by registered domestic partners because registered domestic partners are not spouses for federal tax purposes.
Q25. If a registered domestic partner is self-employed and pays health insurance premiums for both partners out of community property funds, are both partners allowed a deduction under section 162(l) (deduction for self-employed health insurance)?
A25. If one of the registered domestic partners is a self-employed individual treated as an employee within the meaning of section 401(c)(1)(the employee partner) and the other partner is not (the non-employee partner), the employee partner may be allowed a deduction under section 162(l) for the cost of the employee partner’s health insurance paid out of community funds. If the non-employee partner is also covered by the health insurance, the portion of the cost attributable to the non-employee partner’s coverage is not deductible by either the employee partner or the non-employee partner under section 162(l).
Employers and Domestic Partner Benefits
It used to be that couples had to be married to share an insurance plan. But many young adults ages 18 to 24 are more commonly living together without being married than living with a spouse. According to the U.S. Census Bureau, 15% of young adults ages 25 to 34 lived with a partner they weren't married to in 2018, up from 12% in 2008.
Employers and insurance companies have evolved health benefits coverage over time as a result of these trends. Many offer coverage for domestic partners and provide it to more families.
The Role of Gender in Domestic Partnerships
Some employers began offering domestic partner plans for couples who couldn't get married legally, such as same-sex couples or partnerships with nonbinary individuals. They're continuing to revisit their offerings in an effort to attract a wider pool of talent.
More employers may move forward given the legalization of same-sex marriage in the U.S., according to human resource consulting firm Aon Hewitt. They may offer spousal benefits under one umbrella to cover both domestic partnerships and marriages. This could mean that some companies may discontinue domestic partnership benefits because same-sex marriage has been legalized across all states.
Other employers are making domestic partner benefits available to more workers to include any couple, regardless of either partners’ gender.
Do Domestic Partner Benefits Cost an Employer More Money?
Employers may be worried about the cost of offering health insurance to domestic partners and their families, but they don’t have to be. Several studies show that the cost of covering unmarried spouses does not increase more than 1% to 3% for an employer. These studies also show that the actual costs for domestic partner benefits are the same as those of married spousal benefits.
What If Your Employer Doesn't Offer Benefits for Domestic Partners?
Check with your partner's employer if your own employer doesn't provide domestic partner benefits. You can look for your own health insurance package from a private company if neither employer offers these benefits.
Make sure they provide coverage equal to or better than the plans you and your partner can get through work if you opt for alternate benefits. You may be better off maintaining separate insurance plans if they don't.
Otherwise, you have the option of asking for a waiver of health insurance benefits with your employer if you decide to buy private insurance so you can be on the same plan. You can then try to negotiate alternate compensation from your employer to replace the health insurance they don’t have to pay for.
Can You Ask Your Employer to Add Domestic Partner Benefits?
You can also ask your employer to add domestic partner benefits to your company's health insurance plan. Your employer may be more open to the idea if you can show that having plans for unmarried partners isn't more costly than having plans for married spouses.
The coverage for domestic partners can be added to most workplace health plans without too much trouble.
Different rules for different places
Several states (California, Maine, Nevada, New Jersey, Oregon, Washington and Wisconsin) plus the District of Columbia formally recognize domestic partnerships, according to the National Conference of State Legislatures, or NCSL, which compiles civil unions and domestic partnership statuses nationwide. Hawaii uses a different term — “reciprocal beneficiaries” — rather than domestic partners.
California law had restricted domestic partnerships to same-sex partners or for couples older than age 62. On Jan. 1, 2020, the rules changed, allowing different-sex couples of any age over 18 to form domestic partnerships.
In Nevada, domestic partners have the same rights, protections and benefits as married spouses and are both responsible for debts to third parties. Likewise, New Jersey confers to domestic partners “certain rights and benefits that are accorded to married couples,” including “visitation rights for a hospitalized domestic partner and the right to make medical or legal decisions for an incapacitated partner,” as well as certain tax benefits, according to NCSL.
Washington state allows domestic partnership arrangements among same-sex or different-sex partners, as well as among couples with at least one partner who is 62 years or older, who could lose part of their Social Security or pension benefits if they were to tie the nuptial knot.
How Can You Add a Partner to Your Health Plan?
Every insurance plan is different. Ask your plan administrator how to add your partner to your insurance. They'll be able to tell you what kind of insurance your partner can receive, and what forms must be filled out so that your partner can be added as soon as possible.
You may have what is known as a “qualifying life event” if you’re newly established as domestic partners. This will let you change your health plan during special enrollment periods.
Most employer health plans will allow you to add a domestic partner if the plan includes this kind of coverage.
Get in touch
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What are the drawbacks?
Unlike insurance benefits granted to married individuals, contributions made for employees who elect to participate in the Domestic Partner benefits plan and have their partner covered under their plan are considered taxable income by the federal government. However, any insurance premiums your employer contributes to your partner’s policy would not be taxed if your partner meets the definition of “dependent” under the Internal Revenue Code. To qualify as a dependent, your partner must receive more than half of his/her support from you, the taxpayer.
Domestic partnerships also differ from legal marriage since benefits are not portable from one employer to another. There is no recognition outside the city, state or county that offers the status, and insurance benefits may be lost if the employee changes jobs. Let alone, if a couple moves from state to state, they risk their new location not recognizing the domestic partnership.
“A lot of it is at a state level, whereas marriage is at the federal level,” says Ella Taylor, CFP, founder of Ella Financial Advising who specializes in financial advising for women and individuals in the LGBTQ community. “The scary part of domestic partnerships is they could revoke them. You really have to be on top of the different laws and what’s available and what’s not available.”
In addition, the domestic partner affidavits could be viewed as a de facto agreement by the courts, potentially making partners financially responsible for each other’s support and debts. As a result, some attorneys have questioned the wisdom of registering because the financial responsibilities incurred could outweigh the benefits.