Employer Mandate - Dependents

February 4, 2015

Dependents Who Must Be Offered Coverage

In order to avoid penalties under the Affordable Care Act, applicable large employers must also offer affordable health insurance coverage that provides a certain minimum value to all full-time employees' dependents. Generally, an employer meets this requirement by offering coverage to at least 95% of full-time employees (and their dependents).

 

A dependent is defined as a child who is under age 26.  A child is considered age 26 on his or her 26th birthday. A child is a son, daughter, stepson, stepdaughter, adopted child, or eligible foster child.

 

An adopted child is an individual who is legally adopted or lawfully placed with the employee for legal adoption.

 

An eligible foster child is an individual placed with the employee by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 

 

Therefore, generally, an employee's children must be offered affordable health benefits until they reach age 26. The child does not have to be a dependent for income tax purposes.

 

The term "dependent" for this purpose does not include an employee's spouse. Many employers offer health benefits to employees and their spouses and children and they can continue to do so. However, an applicable large employer will not be subject to these penalties for not offering coverage to an employee's spouse.

 

Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein  

 

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