106(g)’s Have Reason To Cheer For Health Care Reform


Tucked within the over 2,300 page Health Care Reform Bill is a section titled “SEC. 461. CERTAIN HEALTH RELATED BENEFITS APPLICABLE TO SPOUSES AND DEPENDENTS EXTENDED TO ELIGIBLE BENEFICIARIES.” There are two main parts that apply to the self employed and will reduce our taxes. This section goes on to talk about amendments to the Internal Revenue Code of 1986, so it’s a bit dry, but bear with me. In general, there seems to be a lot of removing periods, adding commas and changing things from, “and…dependents” to “and any eligible beneficiary” (within the meaning of section 106(g) etc. so on and so forth). So instead of using the antiquated 1986 idea of a nuclear family (Mom, Dad & Children) we now have a more realistic view of what a family is in today’s society. Are you an “Elegible Beneficiary” as defined under 106(g)? You may be if you are: a freelancer who receives health benefits from an unmarried domestic partner… like me! So what does this all mean? Basically, any unmarried person who

receives health benefits from someone else will no longer will have to report any health benefits I receive as “income.” You see, because gays and lesbians are not allowed to marry (and we are not dependents), under the definitions set up in the Internal Revenue Code, any benefits we receive from a health care plan that is not our own are counted as “income” and must be taxed. So, let’s do some simple math on our new found tax savings: If for example, if I were to go

my primary care doctor 10 times last year for routine checkups, flu vaccines, occasional illnesses, etc.: 10 visits @ $150 each (what the insurance company paid) = $1,500 – $200 in copays = $1,300 in “income” x 32% = $416 in additional income taxes. Wow… and that’s kinda estimating on the low side. What if I had cancer and racked up $100,000 in chemotherapy treatments? What if I had expensive maintenance medications? What if I had to go to the emergency room and stay in the hospital for a day or two? I’m not even starting to calculate those things. So for all of you out there who think that the new Health Care Act is going to raise your taxes, guess what? Mine are going down as a result. Yippee!

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