2009 Domestic Partner (Spousal Equivalent) Health Coverage Taxable by asb28647


									                                       2009 Domestic Partner
                                         (Spousal Equivalent)
                                           Health Coverage
                                Taxable Income and Incremental Costs

You and MIT share in the cost of covering a domestic partner and/or his/ her eligible dependent children –
the same as someone would for coverage of a spouse and their own eligible dependent children. However,
there are additional financial and tax implications to consider with a domestic partner. The Internal
Revenue Service (IRS) has determined that MIT’s cost of providing benefits for a domestic partner and
their children is considered “imputed income”, which means it is subject to taxes.

MIT must report the fair market value of an employee’s domestic partner benefits as wages or “imputed
income” to the IRS, resulting in increased taxable gross income for federal and state income taxes. In
addition, FICA (Social Security and Medicare) taxes will be withheld from your paycheck.

The following is an example of the taxability of coverage if you are enrolled in the Blue Cross Blue Shield
(BCBS) Network Blue New England Health Plan. This chart shows the cost of coverage and taxable
“imputed income” under each level of coverage.

Example of Premium Costs and Imputed Income

                              Monthly               Weekly               Monthly               Weekly
  Level of Coverage           Premium               Premium           Imputed Income        Imputed Income
  Network Blue New
                            Faculty/Staff     Support/Service Staff     Faculty/Staff    Support/Service Staff
Employee + Spousal
Equivalent                        $433.00                    $92.38            $496.00                    $112.29
Employee + Employee’s
Children + Spousal
Equivalent                        $511.00                   $110.04            $496.00                    $112.29
Employee + Spousal
Equivalent +Spousal
Equivalent’s Children             $511.00                   $110.04            $893.00                    $202.17
Employee + Employee’s
Children + Spousal
Equivalent + Spousal
Equivalent’s Children             $511.00                   $110.04            $893.00                    $202.17

All premium deductions are on a pre-tax basis and the “imputed income” is subject to federal tax
withholding, state * tax withholding, Social Security tax and Medicare tax.

If you are legally married to your domestic partner there will be no Massachusetts imputed income or state
tax. You will have to provide a copy of your marriage certificate to:
        Benefits Department
        77 Massachusetts Avenue, Building E19-215
        Cambridge, MA 02139-4307

“Imputed income” is calculated on MIT full cost of individual coverage if no Spousal Equivalent’s
children are involved. If there are Spousal Equivalent’s children then the imputed income is calculated
based on the MIT full cost of Employee + Child(ren) coverage.

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