HR Management & Compliance

Ask the Expert: Can an employee’s adult child be covered on employee’s health plan if the child lives in his own home and files his own income taxes?

September 27, 2010

On and after March 30, 2010, both coverage under an employer-provided health plan and amounts paid or reimbursed under such a plan for medical care expenses of an employee’s child who has not attained age 27 as of the end of the employee’s taxable year are excluded from the employee’s gross income under IRC Sec. 105(b) and IRC Sec. 106. An employer may assume an employee’s taxable year is the calendar year. Previously, a child who was not a dependent had to be younger than either age 19 or age 24, if enrolled in school

For this purpose, a child is the son, daughter, stepson, or stepdaughter of the employee, including those who are legally adopted or lawfully placed with the employee for legal adoption and “eligible foster children,” defined as individuals who are placed with an employee by an authorized placement agency or by judgment, decree, or court order. This provision applies to a child of the employee even if the child is not the employee’s dependent within the meaning of IRC Sec. 152(a). Thus, the age limit, residency, support, and other tests described in IRC Sec. 152(c) do not apply to a child for this purpose.


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