@aherasimovich wrote:
Thank you for your information. We were married May 17th 2024, and my employer says we missed the 30 day window to change anything regarding insurance. My (now) husband was already on my plan as a domestic partner, so we don't need to change the plan per-se - we are just wondering if either: 1: the employer can/must change the imputed income calculation, or 2: on our 2024 taxes, can we manually adjust to counteract the imputed income tax we may pay for the rest of the year due to employer's inaction? It seems like whether I change status or not, the fact is that we are now married, and married couples need not count insurance as imputed income - right?
The problem is not that "married couples need not count insurance as imputed income", the problem is that section 125 has strict time limits on when a spouse can be added to a tax-free benefit program. If you miss the time limit, you can't add your spouse to a tax-free benefit program, so any coverage you are lucky enough to get must be taxable.
Because this person is being covered not as a spouse or dependent, they are not covered by the section 125 30 day change rule (even though you are), so it may be possible to drop their medical coverage completely even though it is after 30 days. That would stop the imputed income but would also leave them without medical insurance coverage until your next open enrollment period. That might be unfeasible in your situation. It also depends on how your employer's plan is worded (the employer may be permitted to drop DPs outside the normal window but they are not required to allow it).
Because you are now (after May 17) paying for your spouse's insurance with after-tax dollars, you are allowed to list the premiums for their portion of the insurance (from May 17 onward) as an itemized deductible medical expense on your 2024 tax return. You might get a tax deduction, depending on your total income, your total medical expenses, and your other itemized deductions.
I can't find any other way to mitigate the situation for you. You may want to speak to a tax attorney or CPA on your own.
