If your child, domestic partner, or your partner's eligible dependents are not considered “tax dependents” under federal law, the fair market value of the health insurance benefits provided to your partner and partner’s eligible dependents will be included in your gross income.

This amount is considered "imputed income." This will increase both your taxable income and your tax liability (federal, state and FICA). Under federal law, a domestic partner cannot qualify as your spouse for purposes of excluding employer-provided health benefits from your taxable income.

Unless your children or domestic partner qualifies as a dependent under the Internal Revenue Code (IRC) §152, you will be taxed on the fair market value of the cost of coverage provided to your adult children and/or domestic partner.

The monthly imputed income (fair market value) amounts vary by health plan and are provided for either 1 non-tax dependent, or 2 or more non-tax dependents: http://etf.wi.gov/employers/benefit_programs_imputed_income.htm

You may want to consult a tax advisor to help you determine how imputed income will affect your tax liability. Please also see IRS Publication 501 to help you determine if your adult children, domestic partner, or domestic partner's children qualify as tax dependents.

For more information about imputed income, please see “Taxes” section of ETF's Domestic Partner Benefits FAQ and of ETF's Children to Age 27 FAQ.