House members overwhelmingly approved a health care reform bill Saturday that recognizes gay unions and makes health care more affordable for gay families.

The Affordable Health Care for America Act extends Medicaid to subsidize moderate-income people who otherwise could not afford quality health insurance. Also tucked inside the bill is Representative Jim McDermott's Tax Equity for Health Plan Beneficiaries Act of 2009 introduced in May.

McDermott, a Democrat from Washington, introduced the bill along with Ileana Ros-Lehtinen, a ranking Republican on the House Foreign Affairs Committee from Florida. The bill alters the tax status of health benefits granted to the spouses of gay employees. Under the bill, such benefits would no longer be considered taxable income for the employee.

McDermott told the New York Times that the bill would “correct a longstanding injustice, end a blatant inequity in the tax code and help make health care coverage more affordable for more Americans.”

A report released in 2007 by M. V. Lee Badgett, research director at the Williams Institute, found that gay employees with partners pay, on average, $1,069 per year more in taxes than would a married employee with the same coverage.

“Collectively, unmarried couples lose $178 million per year to additional taxes,” the report says. “U.S. employers also pay a total of $57 million per year in additional payroll taxes because of this unequal tax treatment.”

Human Rights Campaign, the nation's largest gay rights advocate, has supported the legislation.

“I meet people all the time who are gratified they work for companies that offer domestic partner benefits,” Joe Solmonese, president of the Human Rights Campaign, said. “But they pass on the benefits because they cannot afford the taxes that go with the benefits.”

Fifty-nine percent of Fortune 500 companies offer partner benefits, up from 40% in 2003, a 2009 Human Rights Campaign report says.

The legislation now moves to the Senate, where its future remains uncertain.