Wondering if you can extend health coverage to dependents up to age 26 before next Sept. 23? The IRS has spoken — and the answer’s yes.
You’ll recall that the recent healthcare reform law called for extending coverage for employees’ dependents up to the child’s 27th birthday. But the law doesn’t become effective until next September. So, employers asked, would this additional coverage be taxable?
In Notice 2010-38, IRS officials said no. Neither the value of the coverage nor flex plan reimbursements for the adult child will be subject to taxes. The benefits are also not considered wages for FICA and FUTA purposes.
Another clarification: Employees can amend their flexible spending account withholding to cover additional out-of-pocket costs for the adult child, the IRS said.
