What Domestic Partners Need to Know About Applying for Health Insurance Under Obamacare
When registered domestic partners or civil union partners apply for coverage at an Affordable Care Act health insurance marketplace, there’s one question that almost always arises: Do we apply based on our separate incomes, or must we include all the income we make as a couple?
The answer depends on the state where you live.
States other than California, Nevada, or Washington. In almost all states, registered domestic partners or civil union partners who apply for insurance via the state’s health insurance exchange must do so separately. Each partner includes only his or her separate income, and this amount determines health plan costs and eligibility for cost-saving subsidies. It works this way because domestic partners are not considered married for federal tax purposes. (If you registered first and got legally married later, this article doesn't apply to you. You must apply as a married person and report your combined income.)
California, Nevada, or Washington. In these states, which extend community property laws to registered domestic partners, domestic partners must usually apply using half of the partners’ combined incomes. (We confirmed this with the legal department at Covered California after repeatedly receiving conflicting information from representatives staffing the exchange’s customer service phone line.) This is because IRS rules require that domestic partners registered in these community property states report half of their combined community income on their federal taxes each year.
Sometimes, this reporting requirement will have the unfortunate effect of rendering a lower-earning partner ineligible for health insurance subsidies.
Example: Caroline and Susan are registered domestic partners in California. Caroline makes $80,000 per year and Susan earns $30,000 per year. When they apply for health insurance at Covered California, they will complete separate applications but must each include $55,000 of community income (half of their combined community income of $110,000). Neither partner will qualify for premium-lowering subsidies, which are generally available for individuals earning less than about $46,000 per year. If Caroline and Susan were able to apply separately, Susan would have qualified for premium assistance in the form of tax credits.
The only case in which domestic partners registered in community property states would not apply based on combined income is that in which the partners signed a valid pre-registration agreement (like a “prenup”) before registering, in which they opted out of the community property system by agreeing to keep all property separate.
The Bottom Line
In short, how you apply for coverage under the Affordable Care Act depends on how you file your federal taxes. If you include community income when you report your earnings to the IRS, you must include it when seeking health care coverage as well. If you report only separate income to the IRS, you will include only separate income on your health insurance application.
For More Information
To learn whether you are required to purchase health insurancee, see Do I Have to Get Obamacare in California?
To find out how the Affordable Care Act's cost-saving subsidies work, see Ways to Save Money on Obamacare.
If you’re ready to apply, see How Do I Sign Up for Obamacare in California?