Illinois State Tax Treatment of Domestic Partner Health Coverage

The Illinois Religious Freedom Protection and Civil Union Act became effective June 1, 2011. The Illinois Act provides for civil unions between same-sex or opposite-sex couples to have the same rights, protections and benefits of spouses.

The Illinois Department of Revenue confirms that there is no change for state income tax purposes. Illinois will continue to follow the federal tax rules. As a result, civil union partners in Illinois will have imputed income for purposes of state income tax (unless the partner is certified as a tax dependent). There should be no changes to payroll systems. The result is somewhat unexpected considering the breadth of the Illinois civil union law, but the Department explained that the Illinois tax code incorporates the federal tax code. Illinois Department of Revenue published an announcement that confirms Illinois state income tax does not recognize civil unions.

Illinois Civil Union Clarification

Here are a few more details about the Illinois Religious Freedom Protection and Civil Union Act (PA 96-1513) that takes effect on June 1, 2011. The Illinois Department of Insurance has released their guidance on the law. It can be viewed here.

• For all fully insured plans, the effective date of the new law is June 1, 2011.
• Starting June 1, 2011, the date a civil union partnership is officiated will be considered a qualifying event. Employees, spouses and dependents can enroll in the plan due to this qualifying event and the plan will be effective on the date the civil union is officiated.
• For existing civil unions, there will be a 30-day special enrollment period beginning on June 1, 2011 to enroll an existing civil union partner from a union officiated in another state before June 1, 2011. A civil union officiated in another state will be recognized as a civil union in Illinois as of June 1, 2011. From Health Alliance Medical Plans