Pink Fire Pointer Healthcare Reform Update - 27April2010

Healthcare Reform Update - 27April2010

 Tax-Free Employer-Provided Health Coverage Now Available for Children under Age 27
  • The IRS issued guidance today on the tax treatment of healthcare coverage for children under age 27, one of the first federal guidelines to be issued regarding the new healthcare reform law.

  • Health coverage provided for an employee's children under age 27 is now generally tax-free to the employee, effective March 30, 2010.

  • The favorable tax treatment applies to a provision in the healthcare reform law that requires plans that provide dependent coverage of children to continue to make the coverage available until the child turns 26. The extended coverage must be provided no later than plan years beginning on or after Sept. 23, 2010.

  • This means that employees with children who will not have reached age 27 by the end of the year are eligible for the new tax benefit from March 30, 2010 forward. This replaces the lower age limits that applied under prior tax law, as well as the requirement that a child generally qualify as a dependent for tax purposes.

  • The IRS notice says that employers with cafeteria plans can allow employees to immediately make pre-tax salary reduction contributions to provide coverage for children under age 27, even if the cafeteria plan has not yet been changed to cover these individuals. Plan sponsors must amend their cafeteria plan language to incorporate this change by the end of 2010.

  • Read the IRS press release:,,id=222193,00.html

  • Read the IRS notice: