The Internal Revenue Service has issued guidance on the favorable tax treatment of health coverage provided through the Patient Protection and Affordable Care Act for adult children aged 26 and under (Notice 2010-38). The Patient Protection and Affordable Care Act requires group health plans, health insurance issuers offering group or individual health insurance and grandfathered plans to provide coverage for a beneficiary’s dependent child up to age 26 and unable to obtain coverage from an employer. The Notice extends the general exclusion from gross income for reimbursements for medical care under an employer-provided accident or health plan to any employee’s child who aged 26 and under. The change in tax treatment is effective March 30, 2010.
Click here to read Notice 2010-38.