The Internal Revenue Service (IRS) offers criteria to determine if a dependent qualifies as a “tax dependent.” If a dependent qualifies under the IRS criteria, medical, dental and/or vision insurance provided by an employer is not subject to taxation. If you have any questions, contact your tax advisor.
Tax Consequences
The following table indicates whether there are tax consequences for enrolling your spouse, children, domestic partner and/or domestic partner’s children in medical, dental and/or vision insurance.
Added Value Tax
For dependents that do not qualify as a tax dependent, the added value of providing medical, dental and/or vision insurance is taxable to you. You are not taxed on the total medical, dental and/or vision family premiums, but you will pay federal, state, and FICA taxes on the amount (the added value) that provides coverage for the dependents.
Each year, the State calculates the added value of providing dependent coverage for each medical, dental and/or vision insurance plan and for the number of non-qualified tax dependents.
2026 Added Value Tax Matrix (94.2 KB) .pdf
2027 Added Value Tax Matrix (186.09 KB) .pdf
Declaring Tax Dependent Status
Full-Time Student Over Age 26
Full-time students that are unmarried and over the age of 26 may be covered on your medical, dental, and/or vision insurance, pending approval of required documentation. For additional information, refer to Full-Time Student Certification webpage.
- If your full-time student qualifies as your dependent for federal income tax purposes, documentation is required. Submit a copy of your Form 1040 from your prior year’s federal tax return with your student’s name listed. Sensitive information can be redacted.
- If your full-time student does not qualify as your dependent for federal income tax purposes, you will be taxed on the fair market value for the dependent’s coverage. This excess value will be included in your gross income.
Domestic Partner and/or Domestic Partner’s Children
A domestic partner and/or domestic partner’s children may be covered on your medical, dental and/or vision insurance, pending approval of required documentation. For additional information, refer to Domestic Partner Benefits.
- If your domestic partner qualifies as your dependent for federal income tax purposes, documentation is required. Submit a copy of your Form 1040 from your prior year’s federal tax return with your domestic partner’s name listed. Sensitive information can be redacted.
- If your domestic partner does not qualify as your tax dependent for federal income tax purposes, you will be taxed on the fair market value for your domestic partner’s coverage. This excess value will be included in your gross income.
- You cannot submit Flexible Spending Account claims for Health Care or Dependent Care expenses for your domestic partner or your domestic partner’s children.
If you have any questions, contact your tax advisor or your Human Resources Associate (HRA).
The Department of Administrative Services – Human Resources Enterprise is providing this information about the State of Iowa’s benefits. The information on this web page is subject to change. Nothing herein shall be construed as a guarantee of benefits. This webpage is not a complete description of the State of Iowa’s benefit plans. Nothing on this web page supersedes or changes any of the terms and conditions of any plan documents, insurance policies, or other legal agreements. If the wording in this web page contradicts any plan documents, laws, regulations, administrative rules, insurance policies, or other legal agreements, the wording in the official documents and agreements will govern.