Domestic Partner Health Deductions
June 8, 2009
MEMORANDUM
To: All State Agencies
From: Dhiren V. Shah
Assistant Director
Central Payroll Bureau
Subject: Domestic Partner Health Deductions
________________________________________________________________________________
Effective July 1, 2009, State of Maryland is offering health benefits to domestic partners. Employees with domestic partner coverage will pay taxes on the value of the domestic partner coverage. This is because Internal Revenue Service (IRS) does not recognize domestic partners and their children as eligible dependents.
The value of the State subsidy attributable to domestic partner coverage will be included as imputed income in employee’s paycheck. This will appear on the employee’s Earnings Statement as both a deduction and an additional, taxable, current earning. The net effect is a reduction of net pay due to the increase in the amount of taxes (Federal, State, & FICA) paid.
Additionally, the portion of employee premium deduction attributable to domestic partner coverage will be taken post tax and will appear on employee’s paystub separately, for example employee’s portion for prescription coverage will appear as PHARMACY PLAN (pre-tax) whereas, domestic partner coverage will appear as TX PHARMACY (post-tax).
An example of the Earnings Statement showing how domestic partner coverage can affect the employee’s earnings is attached.
Please provide all employees with domestic partner coverage a copy of this memorandum.
Attachment as stated
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Annapolis Data Center, P.O. Box 2396 • Annapolis, Maryland 21404-2396 • 410-260-7401 • 1-888-674-0019 (MD)
Fax: 410-974-2473 • MRS 711 (MD) or 1-800-735-2258 • TDD 410-260-7157 • cpb@comp.state.md.us
Peter Franchot
Comptroller
Robert J. Murphy
Director
Central Payroll Bureau
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