By Tara Siegel Bernard
The New York Times
The health care overhaul package excludes a provision that would have helped same-sex couples: eliminating a tax on employer-provided domestic partner health coverage.
While the health care bill passed by the House of Representatives in November included language that erased the tax, which applies to health insurance coverage offered to the domestic partners of employees, that provision didn’t make it into the legislation signed by President Obama.
As it stands now, employer-provided health benefits offered to domestic partners are counted as taxable income if the partner is not considered a dependent (the amount of the tax is based on the value of the partner’s coverage paid by the employer). Coverage extended to opposite-sex spouses, however, are not subject to the additional tax.
“We are very disappointed this was the outcome,” said Brian Moulton, chief legislative counsel at the Human Rights Campaign.
Last year, we calculated the extra costs that many same-sex couples incur over their lifetime. Not surprisingly, health care costs were one of the biggest contributors. Part of the reason is that most employers don’t offer coverage to domestic partners — about 36 percent of large companies that offer health benefits provide coverage for same-sex partners, according to the Kaiser Family Foundation. Of course, even if employers do offer coverage, the employee is still subject to the tax.
But the health care overhaul could make it easier for people who are not covered by an employer to receive coverage, which may benefit uninsured members of the gay and lesbian community.
Come 2014, people with preexisting conditions cannot be denied coverage, and the uninsured will be able to buy coverage on newly-formed state-run insurance exchanges that must include certain essential benefits. People with low- to moderate incomes may be eligible for subsidized coverage. You can find more coverage on how how the health care overhaul will affect you here, here, and here.
“If you don’t have the option through your own employer, or through your partner’s to get insurance in some manner, there will now be this additional mechanism, the health insurance exchanges, to get individual coverage,” Mr. Moulton added.
There’s arguably a potential upside to not being married. Low-to-moderate income uninsured partners who are not covered by their own employer or their partner’s may be more likely to receive subsidies on premiums and cost-sharing expenses (which includes out-of-pocket expenses like co-payments, coinsurance and deductibles).
After all, since they cannot file joint federal tax returns, their partners’ income would not increase their income to the point where they are no longer eligible. So as long as eligibility depends solely on federal tax returns, their income for subsidy qualification purposes will actually be lower than their true household income.