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Same-Sex Couples Seeking Insurance Wait For IRS Rules

Filed by KOSU News in Health.
August 13, 2013

Now that the Supreme Court has ruled that the federal ban on same-sex marriage is unconstitutional, federal agencies have to figure out the regulations that govern everything from immigration permission to income taxes.

Advocates are waiting for the Internal Revenue Service to decide on details about same-sex marriage. Will the IRS look at where a same-sex married couple lives or where they were married (often referred to as the “place of celebration”)? The decision could affect their health insurance costs.

In recent years, the number of employers that offer health insurance coverage to same sex-spouses has grown steadily. Before the court ruled last June in the challenge to the federal Defense of Marriage Act, employees who took advantage of the insurance benefit had to pay federal income tax on the value of that coverage, which is considered imputed income.

Now, for couples living in the 13 states and the District of Columbia that allow same-sex marriages, that won’t be necessary. But same-sex couples married in those places but living elsewhere face uncertainty.

If the IRS decides to follow its standard practice and recognize marriages based on where a couple lives, these couples could still be responsible for paying income tax on the value of a spouse’s health insurance.

But if the IRS goes with the place of celebration standard, couples living in states that don’t recognize their marriages could avoid paying federal income tax on the spouse’s health insurance. They could still be on the hook for state income tax for the value of the coverage, however.

Advocates are encouraged that the federal Office of Personnel Management said that the legally married same-sex spouses of federal employees will be eligible for health insurance coverage, regardless of where they live.

“That will bring health insurance to many, many people across the land,” says Susan Sommer, director of constitutional litigation at advocacy group Lambda Legal, noting that the federal government is one of the nation’s largest employers. [Copyright 2013 Kaiser Health News]

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