There is lots of information about the recent tax law changes which allow (require?) employers to provide health coverage for adult children up through age 26.
My question is, even before this law change, where is an employer precluded from providing tax-free coverage for *any* dependent, even one who is a non-related individual living with the taxpayer all year and receiving over half their support from the taxpayer? (dependent as defined by §152(a)(9)).
Or, is it just common practice that employers choose not to offer such coverage, even though they could?
My reading of reg. §1.106-1 shows no restrictions on the type of dependent. Is it all a matter of how the employer chooses to set up the health insurance group plan?
Mark Bole wrote in news:j38334$olq$ snipped-for-privacy@dont-email.me:
One problem is whether such coverage is a taxable benefit, such as health insurance for a significant other (unmarried) is/was in New York City, at least until recently. It's a question the lawyers need to sort out before the employer can "give" it.
Many employers offer health coverage for same-sex and opposite-sex domestic partners. As I learned from experience, the additional premiums for covering your partner are not pre-tax -- ie. so you end up paying more for it. I don't know if CA law requires them to cover domestic partners.
Prior to the change in the Affordable Care Act, an employer was allowed to discontinue coverage for an employee's child when the child reached age 19, whether the child was a dependent or not. Every employer I ever worked for did this. Some employers continued coverage for children who were full time students and remained a dependent of the parent. Tax law (sections 105 and 106) excludes from gross income reimbursements for medical expenses incurred by the dependent and the employer contribution to the health plan for the dependent. Employers were free to offer health coverage to employer's children who were not dependents. I just don't know of any employer who did that. If they did, then the amount they contributed to the plan would have to have been reported as taxable wages on the W-2.
The Affordable Care Act says that if an employer offers a plan that includes the dependent children, they must continue to offer that plan to the children until the children attain age 27. The Act amended the tax law to exclude from gross income reimbursements for medical expenses incurred by these adult children up through age 26 whether they were a dependent or not. The Act did not amend Sec. 106. However, in Notice
2010-38, the IRS said that there is "no indication that Congress intended to provide a broader exclusion in § 105(b) than in § 106. Accordingly, IRS and Treasury intend to amend the regulations under §
106, retroactively to March 30, 2010, to provide that coverage for an employee?s child under age 27 is excluded from gross income. Thus, on and after March 30, 2010, both coverage under an employer-provided accident or health plan and amounts paid or reimbursed under such a plan for medical care expenses of an employee, an employee?s spouse, an employee?s dependents (as defined in § 152, determined without regard to §152(b)(1), (b)(2) or (d)(1)(B)), or an employee?s child (as defined in § 152(f)(1)) who has not attained age 27 as of the end of the employee?s taxable year are excluded from the employee?s gross income."
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