As details emerge regarding the health reform act, we will continue to provide updates and information on our blog.

The IRS has issued an announcement that the recent health reform act’s expansion of coverage to dependents of an employee up to age 27 is generally tax free to the employee. IRS Notice 2010-38 provides the guidance to employers and plan administrators about the treatment of this new benefit. Follow this link to read the new IRS guidelines.

The IRS has a web page devoted to the Affordable Care Act’s tax provisions and it is expected that the service will add to this page as new rules and tax treatments are announced.

The following is an excerpt from the recent IRS press release announcement:

The Internal Revenue Service announced today that these changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit.

IRS Notice 2010-38 explains these changes and provides further guidance to employers, employees, health insurers and other interested taxpayers.

“These changes give employers a unique opportunity to offer a worthwhile benefit to their employees,” IRS Commissioner Doug Shulman said. “We want to make it as easy as possible for employers to quickly implement this change and extend health coverage on a tax-favored basis to older children of their employees.”

If you have any questions how this new legislation will impact your business, please contact a CPEhr Human Resources Consultant who can guide you through the new laws.