COBRA and Imputed Income for Domestic Partners?

[Guest Phil Larson]

Lets say we decide to offer COBRA like benefits to Domestic Partners and lets say we figured out how to calculate the imputed income of domestic partner coverage.

The question is how do companys report the imputed income for COBRA participants(example retiree's) who no longer have a paycheck? Is it just giving out a 1099?

[Guest]

I think you would use a 1099-misc. What other form could it be?

[Linda]

Why would there be imputed income for COBRA-like coverage if the former employee or partner are paying for the COBRA-like coverage on an after tax basis?

[JWK]

I agree with Linda, especially if the COBRA premium represents the employee plus employer cost of coverage plus maybe even 2 percent. So there's no employer-provided benefit and no need to impute income....

[JCJD]

What if the company provides company-paid COBRA coverage?

[jpod]

JCJD: Unless IRS has said otherwise (and I don't know why it would have said otherwise), if the individual has COBRA by virtue of his/her prior employment the imputed income would have to be reported on a W-2 under the former employee's name and SSN. Also, I don't know if IRS has explained how you deal with tax withholding requirements attributable to the imputed income, but there's no general exception to withholding just because the wages take the form of taxable health insurance coverage.