U.S. House Bill Would Reduce Taxes on Healthcare Owed By Gay & Lesbian Couples

Editor’s note: I read with interest the following post on Gay Couples Law Blog:

The new health care bill passed by the U.S. House on Saturday would do more than help reduce the amount of people without health insurance. It also would reduce the taxes usually owed by gay couples.

Currently, employees must pay taxes on the health benefits given to their domestic partners or same sex spouses. That’s because DOMA doesn’t let the IRS recognize same sex relationships.

The new health care bill would stop that. Instead, benefits given to to domestic partners would receive the same tax treatment as benefits given to opposite sex spouses.

Robert Pear reported in the New York Times about the effect of current tax law on employee benefits given to domestic partners:

Joseph R. Solmonese, president of the Human Rights Campaign, a gay rights advocacy group, said federal tax law had not kept up with changes in the workplace.

“I meet people all the time who are gratified they work for companies that offer domestic partner benefits,” he said. “But they pass on the benefits because they cannot afford the taxes that go with the benefits.”

M. V. Lee Badgett, a labor economist at the University of Massachusetts, Amherst, said employees with domestic partner benefits paid $1,100 a year more in taxes, on average, than married employees with the same coverage.

If the bill becomes law, it will help reduce the higher lifetime costs of being a gay couple. Tara Bernard and Ron Lieber reported in the New York Times last month that differences in health insurance treatment by the government and employers are by far the biggest contributors to these higher costs.

[Source: Gay Couples Law Blog]

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