Can domestic partners participate in an ICHRA?

Written by: Sue Thurber
Originally published on November 20, 2020. Last updated November 22, 2020.

According to the FindLaw legal dictionary, a domestic partnership is:

“Legal recognition of unmarried homosexual couples and heterosexual couples, offered by some state and local governments. Domestic partnerships offer some of the same benefits enjoyed by married persons -- including the right to share health insurance coverage, and rights under the Family and Medical Leave Act (FMLA).”

The phrase “right to share health insurance coverage” suggests that a domestic partner should be able to be reimbursed for medical expenses through the eligible employee’s (EE) HRA. Unfortunately, this is only partially true. Domestic partners can be reimbursed for expenses through a partner’s employer, but these reimbursements are not tax free. Let’s examine why.

Who is eligible for medical expense deductions?

IRS Publication 502 is the definitive source for any question about which medical expenses are tax deductible. This publication lists all medical expenses eligible for tax deduction, whether paid through your health insurance plan, HRA reimbursement, or taken as a tax deduction at the end of the year.

Publication 502 states that eligible medical expenses apply to those incurred by “yourself . . . your spouse or your dependent.”

The question, then, is whether a domestic partner can be considered a dependent for federal income tax purposes. The IRS establishes these conditions here: Answers to Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions.

This publication states that a partner can only be considered a dependent of the EE if the dependent receives more than half of their support from the EE claiming them as a dependent. Note that support is broader than simple income, referring to criteria laid out in the “Support Test” section here. The IRS adds, “Because registered domestic partners each report half the combined community income earned by both partners, it is unlikely that a registered domestic partner will have gross income that is less than the exemption amount.”

So while it’s possible for a domestic partner to qualify as a dependent on these terms, the vast majority of domestic partners will not.


It’s important to note that the dependent requirement only applies to the tax treatment of salary deductions made through an HRA. A partner can participate fully in the employee’s group health plan or HRA (depending on local law and the policy’s plan documents).

However, unless the domestic partner qualifies as a dependent, according to IRS rules, any contributions the EE makes for a partner’s coverage cannot be made through a pre-tax salary deduction. The household must pay these with an after-tax salary deduction, and the amount will remain a part of taxable income on the EE’s W-2 at the end of the year.

Next up: Learn which types of business owners can participate in an HRA.

Originally published on November 20, 2020. Last updated November 22, 2020.


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