Young adult children get expanded coverage | Tax Tip of the Week | No. 42

Changes made by the recently enacted Patient Protection and Affordable Care Act, provide tax-free health coverage for an employee’s children who are under age 27.  The change is effective March 30, 2010.  These changes immediately allow employers with cafeteria plans to permit employees to begin making pre-tax contributions to pay for this expanded benefit.In addition to extending coverage to older children, the act also requires plans that provide dependent coverage to continue to make the coverage available for an adult child until the child reaches age 26.  The extended coverage must be provided no later than plan years beginning on or after September 23, 2010.  The favorable tax treatment applies to the extended coverage.IRS Notice 2010-38 explains these changes in greater detail and provides further guidance to employers, employees and health insurers.As always, feel free to call us anytime to discuss these ever changing laws.In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com. Rick Prewitt - the guy behind TTW...until next week.