PHILADELPHIA â€“- Beginning July 1, the University of Pennsylvania will provide a tax offset of as much as $125 per month for employees who are covering same-sex domestic partners under their Penn medical plans, with a maximum of $1,500 per year. This offset will appear in employeesâ€™ paychecks as additional taxable income â€” minus applicable state and federal taxes â€” starting in late July.
Currently, many Penn faculty and staff enjoy the employee benefit of paying pre-tax health-insurance premiums for themselves and their dependents, resulting in more take-home pay. However, employees who cover a same-sex domestic partner under the Universityâ€™s benefit plans must pay federal and state taxes on the value of their partnerâ€™s coverage because federal and Pennsylvania tax codes do not recognize domestic partners as dependents.
â€śAt Penn, this tax inequality is being addressed,â€ť Jack Heuer, vice president of the Division of Human Resources, said. â€śPenn has a long history of supporting our LGBT community. We were the first Ivy League institution and among the first local employers to include same-sex domestic partners in our benefits coverage, and now weâ€™re among the first universities to provide this tax offset.â€ť
Early versions of the Obama administrationâ€™s Patient Protection and Affordable Care Act included a tax-equalization provision that would have made health coverage for domestic partners and same-sex spouses free from taxation. But the provision wasnâ€™t included in the final bills signed by the president.
Robert W. Carpick, a professor in the School of Engineering and Applied Science, said the tax offset is a â€śterrificâ€ť step for the University and will make more than just a financial difference. He said it will also â€śhave an effect both in retention and recruitment of top talent.â€ť
â€śThe effect goes beyond LGBT employees,â€ť Carpick said. â€śEmployees who have LGBT family members or friends are increasingly informed and concerned about institutional policies like these, so this will give many people one more reason to be proud of Penn, and that includes me.â€ť
Employees who have elected to cover a same-sex domestic partner under a Penn medical plan will receive a letter outlining the tax offset. Any faculty or staff wishing to add a domestic partner to a medical plan has until June 30 to do so for coverage effective July 1.
On or after July 1, employees can make changes only during a qualifying life event or the annual Benefits Open Enrollment period.
Additional information on the tax offset is available on the Penn Human Resources Web site or by calling 888-736-6236.