Generally speaking, there’s no specific requirement when it comes to offering domestic partner coverage at all, or when it comes to demonstrating eligibility for dependent status, including for domestic partners. Thus, employers have flexibility to define domestic partner and design any documentation requirements as they see fit. That said, an employer sponsoring a fully insured plan should consider state insurance law (which may define “domestic partner”) and any carrier restrictions (some carriers may have their own requirements with respect to dependent (including domestic partner) eligibility and documentation).
Once they settle on domestic partner eligibility terms, employers will need to determine a process for verifying domestic partner status. At the very least, employers should require a signed statement or affidavit relating to domestic partner status. Some employers may go further in requiring additional documentation, including proof of financial dependency (such as a joint checking account, shared lease, etc.) or some type of proof of commitment (such as being a named beneficiary on a life insurance or retirement plan). If the employer is in a state that maintains a domestic partner registry, the employer may require some type of proof of registration.
As far as domestic partner/dependent taxation, IRS guidance confirms that employers may rely on an affidavit to verify tax dependent status, unless the employer has reason to believe otherwise. Employers should remind employees that they have the obligation to notify the employer should that tax status change. If the domestic partner doesn’t qualify as a tax dependent, the employer should remind the employee of the related tax consequences (that the domestic partner’s coverage cannot be paid pre-tax through a cafeteria plan and that the value of the domestic partner’s coverage must be imputed to the employee — meaning it’s included in the employee’s gross income).
Ultimately, employers shouldn’t generally treat domestic partners differently than married couples. For example, requiring additional documentation to show domestic partner status as compared to marital status may be confusing and problematic, particularly for employees. So, if the employer requires only an employee attestation for spouses, it should require the same attestation for domestic partners. If the employer wants to go further and require some type of proof of dependency or registry for domestic partners, it should consider requiring a marriage certificate for spouses. Whatever the employer decides, the eligibility and documentation requirements should be outlined in the plan document and properly communicated to employees.