Health Insurance

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One of the silver linings of our difficult economy and health care crisis most certainly could be the Healthy Texas program.It ensures that small and growing businesses can finally provide health care to their employees. This program, designed by the Texas Department of Insurance, can help small businesses shave an average of 30 percent off their insur- ance premiums. There are some eligibility hurdles, including ensuring that the companies: are between two and 50 employees, have not provided health insurance within the last year, don’t exceed certain salary hurdles, and more.

Another small victory is that the Healthy Texas insurance program provides plans that cover domestic partners. While this is an excellent step in the right direction, there are still some limitations and differences to having health insurance for married couples and coverage offered to unmarried couples.

As we have discussed, marriage is like an expressway where all of the benefits and legal structures are automatically assigned. Domestic partners, same or opposite sex, have to make many stops along the way, making the ride more like a toll road. There are many decisions and stops along the way that are necessary, but both lead to the same destination.

Having access to coverage is not all that should be considered when evaluating health insurance options. In its ongoing advocacy work, the Human Rights Campaign brings attention to the simple fact that nondependent same-sex partners and spouses (and their dependents) are treated differently under federal and most states’ tax laws, including Texas. One of the biggest disadvantages in being covered as a domestic partner and not as a spouse, is that the amount of money paid by the employer’s financial contribution toward health insurance coverage for nondependent same-sex partners must be reported as taxable wages earned, otherwise known as imputed income. This tax penalty, depending on the individual and the estimated value of the health benefit, can be several thousand dollars per year. This dramatic increase in imputed income could even result in the individual paying 50 percent more in federal taxes. In fact, back in 2007, the HRC noted that employees with partner benefits pay an average of $1,069 per year more in taxes than would an employee with the same coverage for a married spouse.

Tax Example (courtesy of the Human Rights Campaign)
If an employee makes $32,000 each year, and the employee’s partner’s insurance is valued at $907 per month, the employee’s tax liability for the year will be $4,710. However, an employee covering his or her spouse in the same situation would have a tax liability of only $3,155. This represents nearly a 50% increase in tax liability.

 


Story by Lynn Yeldell
L Style G Style – Storyteller of the Austin LBGT Community.
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