House-passed health reform bill would bring fairness to taxation of same-sex health benefits

A little-noticed provision of the health care reform bill passed Saturday by the House would change the tax treatment of employer-provided health benefits for same-sex spouses and domestic partners, reports the New York Times:

Supporters of gay rights have long been trying to change the tax treatment of health benefits provided by employers to the domestic partners of their employees. In effect, such benefits are now treated as taxable income for the employee, and the employer may owe payroll taxes on their fair-market value.

Under the bill, such benefits would be tax-free, just like health benefits provided to the family of an employee married to a person of the opposite sex.

Representative Jim McDermott, Democrat of Washington, who proposed the change, said it would “correct a longstanding injustice, end a blatant inequity in the tax code and help make health care coverage more affordable for more Americans.”

-SS