The Supreme Court declared in 2013 that Section 3 of the Defense of Marriage Act, which denied the federal government’s recognition of same-sex marriages (even in states where it was legal), was unconstitutional. And with the Court’s landmark 2015 decision in Obergefell v. Hodges, same-sex marriage became legal nationwide.
The IRS stepped in and declared that two people are legally married under federal law when they are also legally married under their state’s law. Because of this declaration, the IRS treats same-sex and opposite-sex marriages the same under federal tax law, and same-sex couples are also eligible for Social Security spousal benefits. However, domestic partnerships and civil unions, regardless of state, aren’t considered marriages.
Employers Unable to Provide Pre-Tax Domestic Partnership Benefits
Providing pre-tax benefits to employees is an important component of the attraction and retention programs of many companies. But under federal law, an employer can provide pre-tax health insurance benefits only to spouses or dependents, not domestic partners.
Which States Recognize Domestic Partnerships and Offer Benefits?
Here’s a quick snapshot of the U.S. detailing which states have laws around domestic partner benefits and domestic partnership registration. For a deeper dive into a specific state, check out the chart below.
To help organizations stay informed—and compliant—we’ll keep these resources updated in line with any new legislation at federal, state or local level.
Benefits of Domestic Partnership by State
|State||Benefits of Domestic Partnership|
|Arizona||Phoenix and Tucson extend benefits.|
|California||Alameda County, Berkeley, Laguna Beach, Los Angeles, Los Angeles County, Marin County, Oakland, Petaluma, Sacramento, San Diego, San Francisco, San Francisco County, San Mateo County, Santa Cruz, Santa Cruz County, Ventura County, West Hollywood. The following cities and counties have domestic partner registries: Arcata, Berkeley, Cathedral City, Davis, Laguna Beach, Long Beach, Los Angeles, Los Angeles County, Oakland, Palo Alto, Sacramento, San Francisco, Santa Barbara County, and West Hollywood extend benefits.|
|Colorado||Boulder and Denver extend benefits and have a partner registry.|
|Connecticut||State extends benefits. Hartford extends benefits and provides a registry.|
|Florida||Broward and Palm Beach Counties extend benefits and provide a registry.|
|Georgia||Atlanta extends benefits and provides a registry.|
|Hawaii||State extends benefits and provides a registry.|
|Illinois||Chicago and Cook County extend benefits. Oak Park extends benefits and provides a registry.|
|Indiana||Bloomington extends benefits.|
|Iowa||Iowa City extends benefits and provides a registry.|
|Louisiana||New Orleans extends benefits.|
|Maine||Portland extends benefits and provides a registry.|
|Maryland||Baltimore and Takoma Park extend benefits.|
|Massachusetts||Boston, Brewster, Brookline, Nantucket, Provincetown and Springfield extend benefits. Boston, Brewster, Brookline, Cambridge, Nantucket, and Northampton provide a registry.|
|Michigan||Ann Arbor, East Lansing, Kalamazoo, Washtenaw County and Wayne County extend benefits. Ann Arbor and East Lansing provide a registry.|
|Minnesota||Minneapolis extends benefits and provides a registry.|
|Missouri||St. Louis provides a registry.|
|Nevada||State extends benefits.|
|New Jersey||The state extends benefits.|
|New Mexico||Albuquerque extends benefits.|
|New York||Brighton, Eastchester, Ithaca, New York City, Rochester and Westchester County extend benefits. Albany, Ithaca, New York City, Rochester provide a registry.|
|North Carolina||Chapel Hill extends benefits and provides a registry. Carrboro provides a registry.|
|Ohio||Athens, Cincinnati, Cleveland, Cleveland Heights, Columbus, Dayton, Cuyahoga County, Franklin County, Lakewood, Oberlin, Toledo, Yellow Springs provide a registry.|
|Oregon||The state extends benefits. Portland and Multnomah County extend benefits. Ashland provides a registry.|
|Pennsylvania||Philadelphia extends benefits.|
|Texas||Travis County extends benefits|
|Vermont||The state extends benefits.|
|Virginia||Alexandria extends benefits.|
|Washington||The state extends benefits. Olympia, Tumwater and King County extend benefits. Lacey provides a registry. Seattle extends benefits and provides a registry.|
|Wisconsin||Madison, Sherwood Hills Village and Dane County extend benefits. Madison and Milwaukee also provide a registry.|
Domestic Partnership Benefits Tax and Exceptions
If a company’s health insurance plan permits employees’ unmarried partners to be covered, the employer can provide health insurance benefits on a post-tax basis, meaning the fair market value of their partner’s insurance coverage is considered part of the employee’s income. If an employer pays for any part of a domestic partner’s health insurance, that employee benefit is taxable and must be reported on the employee’s W-2 as imputed income.
Domestic Partner Insurance Can Be Tax-Free
It’s possible for employer-paid insurance coverage to be tax-free. On the federal level, an exception is made if the domestic partner meets these three qualifications. They must:
- Receive 50% or more of their financial support from the employee
- Must share a common residence
- And be a citizen, national or legal resident of the United States, Canada or Mexico
The government recommends that an employee include their unmarried domestic partner in a family plan only if they have a child together or if they’ll claim the domestic partner as a tax dependent.
Some Employers are Eliminating Domestic Partner Coverage
Since same-sex marriage became legal, a growing number of companies have eliminated their health insurance coverage for domestic partners. Their justification is that there’s no need to continue offering the coverage now that same-sex partners can legally get hitched and become same-sex spouses.
It’s important to note that companies are not required by federal law to provide domestic partner benefits even if they offer coverage to married couples, but some states and municipalities do mandate coverage to unmarried couples. In most cases, employees must prove domestic partnership to gain eligibility via registration with their local domestic partnership registry, an affidavit certifying the relationship, or other documentation.
Paycor is not a legal, tax, benefit, accounting or investment advisor. All communication from Paycor should be confirmed by your company’s legal, tax, benefit, accounting or investment advisor before making any decisions.
How to Register a Domestic Partnership?
To register a domestic partnership in a state, city or county that recognizes it, you must fill out an application from your city or county clerk’s office. Both partners are required to appear in person and show proof of identity and residence. You will pay a registration fee and sign an affidavit in front of the clerk or a notary public.
Does my organization have a confidentiality policy?
If you’re not out in the workplace and are fearful of discrimination or harassment, it’s important to determine if your company has a policy to prevent disclosure to managers and co-workers.
How will the domestic partner benefits be taxed?
If your company’s health insurance plan permits employees’ unmarried partners to be covered, they will provide health insurance benefits on a post-tax basis. The fair market value of your partner’s insurance coverage will be considered part of your income. If your employer pays for any part of your partner’s health insurance, that is taxable and will be reported on your W-2 as imputed income.
What if my partner is a member of the armed services?
Service members and veterans are covered under federal law as domestic partners or same-sex spouses.
How Paycor Can Help
When it comes to trusted HR expertise, turn to Paycor for help. Paycor’s HR Support Center is a comprehensive HR resource that provides organizations access to employee handbook templates, sample job descriptions, useful checklists, law alerts and more. Plus, dedicated support from an HR expert is always available with HR Support Center On-Demand.