Ark. approves bill updating tax rules on adult child coverage

LITTLE ROCK, Ark.—The Arkansas Legislature has approved and sent to Gov. Mike Beebe a bill allowing employers to extend health care coverage to employees' adult children without employees being taxed on coverage by the state.

The legislation, S.B. 364, that the Arkansas Senate sent to the governor on Tuesday would conform the state's tax law to 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.

Arkansas' action came after several states—including Arizona, California, Kentucky, Maine, Minnesota and Oregon—approved conformity measures, while conformity bills are pending in several other states.

Most states, though, do not have to take such action, because their statutes are amended automatically to reflect changes in federal tax law.