Healthcare Reform Regulations

It has started and is not likely to end for some time...if ever.  The issuance of tax regulations to implement provisions of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 has begun.

The IRS issued temporary regulations that require group health plans to provide health insurance coverage for dependent children until age 26.  The regulations provide that plans cannot condition coverage on whether a child is a dependent for tax purposes, or whether the child is a student or resides with or receives financial support from the parent.

The regulations indicate that a plan or issuer may not define dependent for purposes of eligibility other than in terms of the relationship betwen the child and the participant.  The plan or issuer may not deny or restrict coverage for a child who has not attained age 26 based on the presence or absence of the child's financial dependency on the participant, residency with the participant, student status, employment or any combination of these factors.  In other words, the plan cannot require that the child be considered a dependent for income tax reporting purposes.  In many instances, these requirements would encourage most children age 26 or under to remain on their parents health insurance coverage.

Employers will need to review health plans beginning with their first plan year beginning after September 23, 2010.

Any tax advice contained in the body of this blogwas not intended or written to be used and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.