Thanks to the IRS and Notice 2010-38, small business owners (SBO’s) with cafeteria plans now have guidance on how to provide the recently passed tax free health coverage for employees with children. The employees’ children must be under the age of 27 and are eligible for the tax benefits from March 30th 2010. The term “child” can mean a son, daughter, stepchild, adopted child or eligible foster child. Those SBO’s that have cafeteria plans may allow their employees to immediately take pre-tax salary reductions to provide coverage to their employee’s children.
According to IRS Commissioner Doug Shulman the changes will “make it as easy as possible for employers to quickly implement this change and extend health coverage on a tax-favored basis to older children of their employees.”
The Tech Accountant