Company currently has spousal coverage under it's life insurance plan ($7,500 or $3,500 depending on group). For $7,500 group, ER paid, for $3,500 group - employee pays. Considering opening Spousal benefit to allow Domestic Partners (as allowed in health plans).

Q1. If DP's allowed, is there imputed income on the cost?

Q2. Should there be imputed income on full $7,500 since ER pay all.

Q3. Should there be imputed income for the amount over $2,000 under the group where Employee pays.

I read somewhere that the imputed income for this optional life insurance is necessary for amounts over $2,000 and if the Employer pays all, then the full amount is, including the initial $2,000 is taxable.

Can someone point me in the right direction to find the answer?

Thanks!!

See IRS regs 1.61-2. If the employer provides LI benefits on another person with the employee as the beneficary then the employee is taxed on the value of the premium- Its the ginsberg case. It is no different then if the employer had paid the employee and the employee gave the premium to the ins co.

Have you found an insurance company who is willing to write domestic partners? I would think that state insurance laws may prohibit such coverage.