SEGIP tax update - former spouse insurance coverage

On Aug. 8, some members saw extra tax deductions on their paychecks related to insurance coverage for a former spouse. Previously, SEGIP required employees to keep former spouses on their insurance, even if the employee did not want this coverage. This change comes from a SEGIP policy update earlier this year after they discovered their prior approach violated tax law. 

For 2022-2024, SEGIP settled with the IRS for over $7 million. Employees will not need to amend prior tax returns.  

For January through March 2025, the IRS denied the settlement because it is part of the current tax year. SEGIP reported the value of former spouse coverage from that period to affected members as imputed income, resulting in additional taxes. Members can expect deductions of roughly $150-$250 per paycheck on Aug. 8, Sept. 5, Oct. 3, Oct. 31, and Nov. 26.  

The extra tax burden is outside our contract, but we are actively working with the insurance coalition to seek relief for affected employees. 

If you have questions about the amount being withheld, contact your payroll office or HR. We will continue to share updates as we get them.