My boyfriend and I have been dating for almost two years and moved in together in June. Shortly after that, he was laid off from his job. He got some severance, but this has been a rough time for him, understandably (and for us, if I’m being honest). He recently asked if we could become registered domestic partners so that he could go on my health insurance, which I receive through my employer. His COBRA plan is several hundred dollars more per month than what it would cost to add him to my plan.
I want to help him, but I’m a little nervous about taking this step. If I add a dependent to my health insurance, it will basically double what I pay now. He has offered to pay me back for the difference. But one of my co-workers said it could also affect my taxes (we live in New York). Are there any other costs or fees that I need to know about before I make this commitment? Also, what if he can’t afford to pay his portion of the premium? Will I be on the hook for it? Are there any legal agreements that we should sign before we do this? What happens if we break up?
I don’t mean to sound paranoid. I love my boyfriend and trust that he is doing his best to look for work. But as the child of divorced parents, I am cautious about making commitments that involve finances. What should I do?
First of all, I’m sorry about your boyfriend’s job loss and the pressure it’s putting on you. In my personal experience, getting laid off is one of the more demoralizing things a person can go through (and don’t just take it from me — it’s up there on the list of most stressful life events, according to the Holmes-Rahe Stress Inventory scale). But you know what else ranks close behind? “Spouse beginning or ceasing work outside the home.” I know your boyfriend isn’t your spouse exactly, but his employment status has major implications for you, your living situation, and your role in his support system. You, too, are weathering a stressful life event. So I can understand why you’re wary of leveling up your relationship during this challenging time, especially if it could affect you financially.
I also know how it feels to be in your shoes. About ten years ago, my live-in then-boyfriend quit his job and had a lot of trouble finding a new one. I’d often come home to our crappy apartment after a long workday to find him parked on the same couch cushion where I’d left him over 12 hours earlier. He was frustrated; I was tired of his moping; it sucked for both of us. When he proposed domestic partnership so that he could go on my health insurance, I was hesitant for many of the same reasons that you are. But after hearing his case, I said yes. (Shortly thereafter, he found a new job. Now we’re married, and I’m on his health insurance.)
Of course, just because domestic partnership worked out for us doesn’t mean it’s the right decision for you. Also, much has changed in the past ten years in terms of health-insurance offerings, so your boyfriend has more options to choose from. More on those in a minute.
To address your logistical questions, I spoke to Stephanie Genkin, a certified financial planner and financial therapist. She confirmed that becoming domestic partners will not affect your federal tax filing status; you’ll both still file as single payers. However, adding a domestic partner to your health-insurance plan could increase your income taxes based on whatever your employer contributes to the plan’s overall cost (this is treated as “income” by the IRS). The exact amount will be labeled on your pay stub as “imputed income,” so you could ask your boyfriend to reimburse you for that too (Genkin says it will likely be pretty low). To learn more specifics about what this number might look like, she suggests talking to your company’s HR department.
Otherwise, adding your boyfriend as a dependent won’t have implications for your 401(k) contributions or any matching program offered by your company, since that’s calculated based on your gross income (before health-care costs). Finally, registering for a domestic partnership in New York costs $35; it seems fair to ask your boyfriend to cover that too.
If you want to sign some kind of legal agreement before you move forward, Genkin recommends creating a promissory note using an online template. (Hiring a lawyer is expensive and unnecessary for this, she says.) Also, if your boyfriend doesn’t pay, you hold the cards here — you can just end the partnership and take him off your plan. (Terminating a domestic partnership costs $27 and counts as a qualifying life event, so he’ll be able to enroll in a different insurance plan and you’ll be able to take him off yours.)
So, those are the costs involved — it’s not nothing, but the risks are not terribly high, either. That said, if you aren’t comfortable with this idea to begin with, don’t do it! I realize that your boyfriend is in a tough spot and you want to help him out, but you don’t want to get stuck in a situation where you’d feel bad breaking up with him because it would compromise his health care.
“If you’re skittish, moving ahead with domestic partnership may strain the relationship even more,” says Genkin. Luckily, you have some good alternatives to explore. “Since your boyfriend is unemployed and not earning income, he should first contact the New York State of Health and speak to a health-care navigator in his area,” she suggests. “He’s probably entitled to pick a plan and sign up for Medicaid, which would save him a lot of money and avoid complications at home.”
Whether or not you decide to proceed with domestic partnership and joint health insurance, this topic is an opportunity to talk more openly, regularly, and intentionally about your finances. I’m aware that this may be difficult for your boyfriend at this point since he’s in a vulnerable place. But that’s precisely why you should do it now. Troubleshooting when you’re in the weeds is essential, and you’ll learn a lot about your partner in the process — including whether or not your relationship is worth sticking with.
Correction: A previous version of this story incorrectly stated the effect adding a domestic partner to your health insurance could have on your taxes; it might increase your income taxes.