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IRS Issues Guidance to Facilitate Employers' Offering Health Plan Coverage to Adult Children

The recent health reform legislation generally calls for employers maintaining group health plans that cover dependent children to extend coverage to adult children until they reach age 26. This requirement does not become effective until the first plan year beginning after September 23, 2010 (and in certain respects until a later date). Nevertheless, many employers are interested in extending this coverage before they are required to do so under the law. As the legislation was written, however, this extension of coverage created potential tax issues and administrative obstacles. To facilitate prompt implementation of the extended coverage, the IRS and Treasury issued guidance that resolves these issues and eliminates these obstacles. This Alert explains how this guidance provides useful relief for employers in this regard.