ACA News & Publications

California State Tax Issue – Up to Age 26 Coverage Relief Achieved (But May Involve Some Corrective Action)

April 8, 2011

On April 7, 2011, California Governor Brown signed Assembly Bill (AB 36) which conforms California state law with federal law to allow tax exclusions or deductions for employers providing health care coverage to dependents under age 27. The bill offers relief from imputing state income back to March 30, 2010, which is the date on which federal tax laws changed to waive dependency requirements for children up to age 26. Please see the attached reprint of our November 19, 2010 HCR Pathways which discussed this issue in greater detail.

What You Should Do

If you were not conforming with California state law, there is no action required on your part as the relief is retroactive to March 30, 2010 (i.e., there was never any requirement to comply with the California state law).

If you were conforming and reported imputed income for 2010 and/or 2011, you should contact your payroll vendor and/or tax advisor to determine the most appropriate course of corrective action for any affected employees.

For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:

Burnham Benefits

This ACA Pathways is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

The information contained in this ACA Pathways includes emerging health care news from a limited perspective and does not encompass all views. The information was selected from a wide range of sources selected on the basis of their potential impact on employers and/or their employee benefit plans. For more information, please contact Burnham Benefits.

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