Adult Dependent Coverage and Divorce

[Guest bobolink]

Assume a divorce agreement that provides that Dad maintains hospitalization, major med, dental and vision until emancipation (as defined) unless child attends a post-secondary educational institution. In that case Dad continues to maintain the coverages until the first of he or she reaches age 23, permanently discontinues said education or graduates from said institution.

Will the health reform extension to age 26 modify this type of provision by operation of law or will we have to go in and amend/

any thoughts?

[Guest sniffles]

I believe it will automatically take effect regardless of any divorce decree in effect. Once child graduates and law goes into effect, parent can re-enroll child in health plan up to age 26.

[GMK]

Just a reminder:

If Dad is subject to state income tax, Dad and Dad's employer need to check whether the coverage for the adult child results in imputed income for state income tax and withholding purposes.

The new federal law does not require that the child be a "tax dependent" for federal "tax free" coverage to age 26, but not all states are with the federals on that.

If your state is not yet with the feds, then the value of the coverage for an adult child who is not a tax dependent for state income tax purposes very well may be imputed income for state tax purposes for Dad, even though it is not for federal tax purposes.