A Special Note About Plus One Adult Dependents
Associates electing Plus One coverage contribute at the same level as they would contribute for Employee + Spouse (Plus One), or Family (Employee, Plus One and Child/Children) coverage. However, the value of Plus One dependent(s) is taxable and will cause an increase in taxes taken from your paycheck.
Here’s a brief explanation and sample of how the taxable income is calculated and applied when you add a Plus One Adult Dependent other than your spouse:
Explanation:
IRS regulations require that employee contributions for coverage of Plus One Adult dependents must be made on an after-tax basis only. Accordingly, LHS calculates what the associate would pay for his or her own coverage and takes that amount on a pre-tax basis. The remaining associate portion of the premium is then paid with post-tax dollars. The amount which LHS contributes towards the total cost of the premium must be considered as imputed income according to IRS regulations. The difference between the cost of what LHS would pay for the associate (including any qualifying children) and the total amount paid by LHS (what LHS therefore pays for the non-Code-dependent individuals) will be shown on the associate’s bi-weekly paycheck as imputed income.
As a result, your payroll taxes will increase if you select Plus One coverage. To find out more about the specifics of IRC Section 152 go to Given the complexity of the criteria, we recommend that you consult with your attorney or tax professional about the specifics of your particular situation.
Sample cost (using 2011 costs) and imputed income tax calculation:
Sample Scenario - Associate is:
- Full-time
- Enrolled in Aetna Standard Plan, and coverage tier is Employee + Plus One Adult
- Enrolled in Cigna Dental Premier, and coverage tier is Employee + Plus One Adult
Aetna Standard Plan
- Monthly Premium Equivalent for Employee (EE) + Plus One Adult = $1047.62
- Monthly Premium Equivalent for Single = $551.38
- Take difference from EE + Plus One Adult minus Single = $1047.62 - $551.38 = $496.24 (this is the monthly amount to be taxed; however, we need to convert it to an annual amount so that we can break it down to a per-pay-period amount).
- Multiply monthly amount by 12 to get annual amount = $496.24 x 12 = $5954..88
- Take annual amount and divide by 26 (number of pays per year) to get the per-pay-period amount = $5954.88 / 26 = $229.03
- The amount of $229.03 is the amount that will appear on the associate’s bi-weekly paycheck so that medical amount can be appropriately taxed.
Cigna Dental Premier
- Monthly Premium Equivalent for Employee (EE) + Plus One Adult = $53.89
- Monthly Premium Equivalent for Single = $27.10
- Take difference from EE + Plus One Adult minus Single = $53.89 - $27.10 = $26.79 (this is the monthly amount to be taxed; however, we need to convert it to an annual amount so that we can break it down to a per-pay-period amount).
- Multiply monthly amount by 12 to get annual amount = $26.79 x 12 = $321.48
- Take annual amount and divide by 26 (number of pays per year) to get the per-pay-period amount = $321.48 / 26 = $12.36
- The amount of $12.36 is the amount that will appear on the associate’s bi-weekly paycheck so that dental amount can be appropriately taxed.
Lourdes Health System
Frequently Asked Questions about “Plus One” Benefits Coverage
Who qualifies for coverage as Plus One Dependent?
A Plus One dependent is an individual over age 18 who has lived in the same principal residence as the associate for at least 12 months and remains a member of the associate's household throughout the coverage period; and who has a close personal relationship with the associate (not a casual roommate or employee, such as a nanny or a personal care attendant), shares basic living expenses and is financially interdependent with the associate, is neither legally married to anyone else nor legally related to the associate by blood in any way that would prohibit marriage.
Are the children of a Plus One dependent eligible for coverage?
A dependent child of the Plus One dependent who has lived in the same principal residence as the associate for at least 12 months and who is the Plus One dependent’s dependent child who meets the definition of his or her tax dependent as defined by Section 152 of the Internal Revenue Code during the coverage period, is eligible for the Health, Dental and Vision coverage as long as the child remains a member of the associate's household throughout the coverage period.
When can I enroll a Plus One dependent for coverage?
You can enroll a Plus One dependent under the Health, Dental and Vision Plans within 31 days of your date of hire, during Open Enrollment, or within 31 days of a qualifying change in status. After the termination of coverage for a Plus One dependent, there is a 12 month waiting period before a new Plus One dependent may be enrolled.
How much will these benefits cost the associate?
Associates electing Plus One coverage contribute at the same level as they would contribute for Employee + Spouse (Plus One), or Family (Plus One and Child/Children) coverage. The Health, Dental and Vision benefits are available. There is no option available for dependent life. However, the value of PLUS One dependent(s) is taxable and will cause an increase in taxes taken from your pay check. Please see the question below about the tax treatment of payroll contributions, both yours and those made byLourdes Health System.
Are there tax or other legal implications of these benefits?
IRS regulations require that employee contributions for coverage of Plus One dependents must be made on an after-tax basis ONLY. Accordingly, Lourdes calculates what the associate would pay for his or her own coverage and takes that amount on a pre-tax basis. The remaining associate portion of the premium is then paid with post-tax dollars. The amount which Lourdes contributes towards the total cost of the premium must be considered as imputed income according to IRS regulations. The difference between the cost of what Lourdes would pay for the associate (including any qualifying children) and the total amount paid by Lourdes (what Lourdes therefore pays for the non-Code-dependent individuals) will be shown on the associate’s bi-weekly paycheck as imputed income.
As a result, your payroll taxes will increase if you select Plus One coverage. To find out more about the specifics of IRC Section 152 go to Given the complexity ofthe criteria, we recommend that you consult with your attorney or tax professional about the specifics of your particular situation.
What documentation is required to enroll a Plus One dependent for coverage under the Health, Dental and Vision plans?
Lourdes requires proof of financial interdependence, which can be established by three of the following:
- Proof of common property ownership (joint deed or mortgage agreement) or a common interest in property
- Proof of common ownership of a motor vehicle
- Proof of joint bank accounts or credit accounts
- Proof of designation as the primary beneficiary for life insurance or retirement benefits, or primary beneficiary designation under the other's will
- Assignment of a durable property power of attorney or health care power of attorney
When does a Plus One dependent become ineligible for coverage under the Plans?
Plus One coverage under the benefits plans will end on the earliest of: a) Midnight of the day on which an associate's employment terminates; or b) Midnight of the day in which the individual no longer satisfies the eligibility criteria for Plus One dependent status.
Associates must notify theLourdes Benefits Center at 855-Ben-Yes1 (855-233-9371) immediately of any changes in eligibility status.
When the Plus One is no longer eligible for coverage, is that individual eligible to elect COBRA continuation coverage?
No. Only a spouse or dependent children of a covered associate may be a COBRA beneficiary when they lose coverage.
Do you have additional questions?
For more information about health insurance coverage for a Plus One dependent, contact the Lourdes Benefits Center at 855-Ben-Yes1 (855-236-9371).
2012 Benefit Plan YearRevised 01/26/2012