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Member, Beacon International Group, Ltd.
MADISON, Wis.—The Wisconsin Senate unanimously passed legislation that would enable employers to offer coverage to employees' adult children up to age 26 without employees being taxed on the coverage.
The measure, S.B. 203, would conform Wisconsin tax law to the federal health care reform law, which requires such an extension of coverage to employees' 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.
Previously, the U.S. Tax Code allowed tax-free coverage of employees' children up to age 19, or up to age 24 if the child was a full-time college student.
Currently, Wisconsin is the only state that has not conformed its tax law to federal tax law on the extension of coverage to employees’ adult children.
More than a dozen states, including California, have changed their laws since the start of the year. The remaining states either automatically conform their tax laws any time federal tax law changes or do not impose income taxes.
The measure, approved Tuesday by the state Senate on a 33-0 vote, now will be considered by the state Assembly, where passage is expected.
Nationally, about 1 million young adults gained health insurance during the first quarter of 2011 due to the adult child coverage requirement, the Department of Health and Human Services reported last month.