In a ruling dealing with the child coverage extension contained in the new federal health law, the Internal Revenue Service has announced a liberalization of tax laws as they pertain to older covered children.
In Notice 2010-38, issued April 27th, the IRS ruled that adult children covered under a parent’s health plan are no longer subject to imputed income with respect to employer contributions to the parent’s plan. In addition, the parent may pay any required premium to cover that dependent on a pre-tax basis through the employer’s section 125 plan.
These changes are effective March 30, 2010 and apply to all covered children, regardless of their tax dependent status, up to the year in which they turn 27.
This applies only to adult children and does not change any of the rules with respect to domestic partner coverage.
If you would any more information, please contact Summit Benefit Solutions or follow the link below to the IRS news release.