IRS Explains Favorable Health Coverage Tax Treatment for Adult Children

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IRS issues Notice 2010-38 on the tax treatment of health care coverage for an employee's adult children as provided in recent law changes, announcing in an accompanying news release (IR-2010-53) that employers with cafeteria plans may immediately allow employees to begin making pre-tax contributions to pay for the expanded benefit. The expanded care is now generally tax-free to the employee, as provided under the health reform law, and applies to various workplace and retiree health plans, as well as to self-employed persons who qualify for the self-employed health insurance deduction on their federal income tax return, IRS says.  

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