Column One:
Eye on Unmarried America

September 10,  2007  



Critic says new employee benefits laws hurt families

By Thomas F. Coleman

The Republican leader of the New Hampshire state Senate wrote a commentary this week for the Seacoast newspapers criticizing Democratic lawmakers for passing three new employee benefit laws.

Senator Ted Gatsis claims that the bills will have "unintended consequences on the insurance laws of New Hampshire as well as the small-business owners and their employees."  "These bills will cause enormous problems because of the taxes that New Hampshire families will be obligated to pay," Gatsis argues.

House Bill 790 allows unmarried New Hampshire young adults to remain eligible for insurance on their parent's benefits plan until the age of 26, regardless of whether they are enrolled in college.  House Bill 437 permits same-sex couples to enter civil unions and have the same rights, responsibilities and obligations as married couples under state law.  Senate Bill 197 allows a divorced or legally separated spouse to continue employer-sponsored group health insurance coverage.

Gatsis points out that these new state laws conflict to some extent with federal laws governing the same subject matter.  As a result, employers in New Hampshire will have to fill out extra paperwork and some employees will have to pay additional federal income taxes if they choose to participate in these new benefits programs.

What Gatsis fails to mention is that employee participation in these new benefits plans is voluntary.  Same-sex partners won't be forced to register for a civil union, parents won't be required to keep an adult child on their benefits plan, and the continuation of health benefits for an ex-spouse is not mandatory.

The senator explains that federal law does not recognize same-sex marriages and therefore same-sex partner benefits are not tax exempt under IRS rules, although spousal benefits are.  So an employer's contribution to a partner's health benefits may be taxable to the employee as non-exempt benefits compensation.

Employers will explain this to employees before they sign up for such benefits.  I'm sure that gay couples can do the math.  If it is financially beneficial for them to participate in such a benefits plan, they will enroll.  If not, they won't.

Gatsis says that HB 790 conflicts with federal tax laws because the "Internal Revenue Code's definition requires the dependent to be 23 years of age and younger."  So what? 

If an employee pays the full premium for an adult child between 23 and 26 years of age, there will be no tax under federal law, but there could be a major savings in a group premium versus buying an individual policy for the child.  If the employer pays a portion of the premium, and if the adult child does not meet the federal definition of an exempt dependent, then the parent will pay some tax on the employer's contribution. 

Again since parental participation is voluntary, the only problem I see is with federal laws which are not "family friendly" in their overly restrictive definitions of an exempt dependent.

"The bottom line and ambiguity with the aforementioned pieces of legislation is there's a wide scope of differences between existing federal and state laws," Gatsis argues.  "And unfortunately for the people of New Hampshire, many will be confused when it comes to filing their taxes next year."

Because federal tax laws are often confusing, Gatsis attacks state Democratic lawmakers for expanding benefits protections for workers and their families.  It seems to me that his criticism should be directed toward Congress for not giving more leeway to the states in designing benefits laws that meet the needs of workers and their dependents. 

Why isn't this Republican senator defending state's rights?  Why isn't he lambasting the federal government for taxing workers who obtain health benefits for family dependents?

New Hampshire is not out of the mainstream in adopting a broad definition of "eligible family dependent" for workplace health benefits.  Many cities and states and thousands of private employers have reshaped benefits programs to respect family diversity, which includes the realities of dependent adult children, divorce, and same-sex couples.

It seems to me that the Republican leader has concocted phony arguments to attack these progressive health benefits laws and the Democratic legislators who voted for them.  Perhaps the tax argument is a Trojan horse which conceals another hidden agenda.

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Unmarried America 2007

Thomas F. Coleman, Executive Director of Unmarried America, is an attorney with 33 years of experience in singles' rights, family diversity, domestic partner benefits, and marital status discrimination.  Each week he adds a new commentary to Column One: Eye on Unmarried America. E-mail: Unmarried America is a nonprofit information service for unmarried employees, consumers, taxpayers, and voters.