Health insurance provided by employers to their employees, the employees’ federally recognized spouses, and their children is considered a non-taxable fringe benefit under federal law. Health insurance for an employee’s domestic partner or same-sex spouse also is a fringe benefit, but is not deemed exempt from income tax liability by the Internal Revenue Code.

For federal tax purposes, but not in all states (e.g., California), employers who provide insurance for domestic partners and/or same-sex spouses of their employees must report the value of those benefits as taxable income imputed to their employees.

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