April 2010

IRS Provides Guidance on Health Coverage for Adult Dependents, Addresses Discrepancies in Law

From Journal of Accoutancy.

The IRS issued guidance Tuesday on the tax treatment of health coverage for children who have not yet turned 27 (Notice 2010-38).

The health care reform legislation enacted in March extended the general exclusion from gross income for reimbursements for medical care under an employer-provided accident or health plan (under IRC § 105(b)) to any employee’s child who has not yet turned 27 by the end of the tax year. The legislation made a similar change for retiree health accounts in pension plans, voluntary employees’ beneficiary associations, and for deductions by self-employed individuals for medical insurance.

The health care legislation also requires group health plans and health insurers that provide dependent care coverage to continue to make such coverage available for an adult child until age 26. This requirement is not exactly parallel to the amendments to the Code.

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