As group health plans brace for open enrollment periods under the new Patient Protection and Affordable Care Act of 2010, one of the key issues they face is the Act’s new coverage requirements for adult children. Previously, a child became ineligible for family coverage under a group health plan for federal tax purposes once the child reached age 19, or in the case of a child who was a full-time student, age 24. The Act raised the maximum age for adult children to age 26 and eliminated the requirement that the child be a full-time student. These FAQs include questions posed by plan sponsors concerning the new requirement, as well as model language to use to notify dependents of their coverage options. Plan sponsors should study the new requirement, as it is likely to be a hot button issue for many employees. 

Employers across the country have been preparing to meet the new W-2 reporting requirement under the Affordable Care Act, that generally requires employers to report on Form W-2 for tax years beginning with 2011 the cost of health coverage provided to the employee. In Notice 2010-69, the IRS  has provided employers with another year to comply.

Specifically, this notice provides that reporting the cost of such coverage will not be mandatory for Forms W-2 issued for 2011 (i.e. for 2011 earnings). The relief was provided in order to give employers additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement. Thus, an employer will not be subject to any penalties for failure to report such amounts on its employees’ Forms W-2 for 2011. The Treasury Department and the IRS anticipate issuing guidance on the reporting requirement before the end of 2010.