Tax Facts

333 / How does health reform expand the income exclusion for adult children’s coverage?

Updated: March 13, 2024 at 05:07 AM
Under the Affordable Care Act (ACA), the exclusion from gross income for amounts expended on medical care ( Q 8789) is expanded to include employer provided health coverage for any adult child of the taxpayer if the adult child has not attained the age of 27 as of the end of the taxable year. According to Notice 2010-38, the adult child does not have to be eligible to be claimed as a dependent for tax purposes for this income exclusion to apply.1




1.     IRC § 105(b), as amended by the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010. Notice 2010-38, 2010-20 IRB 682.


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