S.C. approves bill updating tax rules on adult child coverage

COLUMBIA, S.C.—The South Carolina Legislature has given final approval to a bill to allow employers to extend coverage to employees' adult children without employees facing state taxes on the coverage.

The legislation, S. 522, which lawmakers approved last week and sent to Gov. Nikki Haley, would conform the state's tax law to the federal law.

That law requires extending 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.

South Carolina's action comes after that of a number of states, including Arizona, California, Kentucky, Maine, Minnesota and Oregon, which have approved conformity measures, while conformity bills are pending in several others.

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