So…. You want to add your significant other to your employer sponsored health insurance? Think you can just mark the “Common Law Marriage” box and save some money? Think it’s no big deal?
Common law marriage is marriage. It has the same obligations and the same rights as any other marriage. This means that taxes are to be filed under “married” status, and if the parties decide to go separate ways, they legally need to pursue a divorce, annulment or other applicable legal end to the relationship. A person cannot pick and choose what benefits of marriage they do want, but what obligations related thereto they don’t, just because they elected common law marriage. It is all or nothing. Common law marriage is a big deal, and checking the box declaring that marriage is likewise.
The pickle in which I find people is that they checked that magical “Common Law Marriage” box on their employer sponsored health insurance years prior, have never considered themselves married otherwise, and filed single tax returns all those years. That is a dangerous fact combination, as they have either committed insurance fraud or tax fraud. Although, I can discuss the implications and the filing of a divorce, I must refer the client to another lawyer or lawyers to advise them as to the fraud considerations.
The relief that the Internal Revenue Service can seek is broad, including seeking interest and penalties that have accrued for filing under the wrong status. The insurance company can seek reimbursement for any and all monies they paid out on claims of the non-employee “spouse.” The employer can dismiss the employee for cause, as well as seek reimbursement for the employer’s share of the “spouse’s” premium the company covered. Also to be remembered is the criminal fraud component, which has its own penalties.
I do wish that for every opportunity to check the Common Law Marriage box there were a disclaimer — WARNING, BY CHECKING THIS BOX YOU ARE MARRIED IN ALL RESPECTS. YOU MUST FILE TAXES AS MARRIED. YOU MUST GET A DIVORCE/ANNULMENT/OR TAKE OTHER LEGAL ACTION TO DISSOLVE THIS RELATIONSHIP. But, until then, maybe this blog post will get the word out: Common Law Marriage is Marriage. Govern yourself accordingly.