Same Gender Domestic Partner Medical and Dental Insurance Amounts ...
Excludable From Gross Income

An employer provides medical and dental coverage for its employees and their eligible dependents under a welfare benefit plan which includes same-gender domestic partners.  Prior to the same-gender domestic partners enrollment in the plan, the employee and domestic partner must complete and have notarized a Domestic Partner Affidavit to certify that a domestic partner relationship exist.  This must be done annually to confirm the relationship for continuation of benefits.

Although an employee's same-gender domestic partner doesn't qualify as a "spouse" under the Internal Revenue Code, he or she may qualify as dependent if the §152(a)(9) and §152(b)(5) requirements are met.  Therefore, the employer can rely on domestic partner certification to show that the support and relationship tests are met, and to establish the domestic partner as a dependent for the sake of determining taxability of partner medical and dental coverage.

Coverage and reimbursements to qualified dependents are excludable form the employee's gross income under §§105 and 106 and are not includable in wages for employment tax purposes.  However, any amount in excess of FMV of coverage for a partner who does not qualify as a dependent, over the amount the employee paid for coverage, is includable in gross income and subject to employment tax.

PLR 200339001