Employee Relations 02/04/2011
California Tax Law Implications Arise From New Adult Child Health Coverage Law
In March 2010, President Obama signed into law the Patient
Protection and Affordable Care Act, which includes a provision
that, effective September 23, 2010, dependent children are
permitted to remain on their parents’ insurance plans until their
26th birthday. Regulations then published by the Internal Revenue
Service on May 17, 2010 (IRS Notice 2010-38) state that employees
will not be taxed on premiums paid by an employee for
a nondependent child who has not reached age 27 by
December 31 of any calendar year. That exclusion from taxation
also extends to cafeteria plans, flexible spending accounts and
health reimbursement arrangments.
California, however, did not pass the necessary legislation to provide those federal tax breaks under state law. Therefore, the value of coverage for nondependent children is considered income for tax purposes and must be reflect on the employee’s W-2.
The California Employee Development Department released a notice on January 24, illustrating how employers can calculate the value of medical coverage for the purpose of determining the employee’s income.
SB 129 (Leno) – Watch
As introduced on January 28, 2011
SB 129, by Senator Mark Leno, would prohibit an employer from discriminating against a person in hiring, termination or as a condition of employment or otherwise penalize a person based upon the person’s status as a qualified patient or a positive drug test for marijuana.
SB 129 does not prohibit an employer from terminating or taking corrective action against an employee who is impaired on the premises of a place of employment or during the hours of employment due to the medical use of marijuana.
SB 129 is awaiting assignment to a Senate policy committee.