Kentucky updates tax rules on adult-child health cover

FRANKFORT, Ky.—Kentucky Gov. Steven Beshear has signed legislation into law that enables employers to extend health care coverage to employees’ adult children without employees being subject to state taxes on the coverage.

The legislation, H.B. 255, which the governor signed last week, conforms Kentucky tax law with the federal health care reform law. The federal law requires employers to extend health care coverage to employees’ adult children up to age 26. Subsequent Internal Revenue Service rules said the coverage can be extended on a tax-free basis through the end of the year in which the child turns 26.

Under prior Kentucky law, an employee’s child had to be younger than 19, or 24 if a full-time student, for the coverage to be provided on a tax-free basis.

Similar tax conformity bills were passed this year in Arizona and Maine, while a measure was approved this month by the California Assembly and is awaiting action in the state Senate.