Wisconsin law currently requires insured health plans and governmental self-insured plans with dependent coverage to cover an adult dependent child up to age 27. On June 26, 2011, Wisconsin enacted the 2011-2013 Budget Bill (2011 Wisconsin Act 32), which changed this requirement. Effective as of January 1, 2012, these plans that allow dependent coverage will be required to offer health plan coverage of an adult dependent child only up to age 26.
Consequently, beginning in 2012, Wisconsin insurance law will be generally consistent with federal law under PPACA with regard to age limitations, marital status and other employer coverage for the health coverage of adult children. However, one major difference remains. Wisconsin insurance law continues to allow health coverage for a child who is a full-time student beyond age 27 if that child was called to active military duty while under age 27 and was attending an institution of higher learning on a full-time basis prior to being called to active military duty.
Tax conformity issues related to coverage of adult children under group health plans have not been resolved by the enactment of the 2011-2013 Budget Bill. Unlike federal tax law after PPACA, Wisconsin tax law continues to require children under age 27 to satisfy the requirements for a qualifying child or a qualifying relative under Internal Revenue Code (Code) section 152 to be considered a tax dependent. Consequently, if an employee enrolls an adult child in his or her employer's group health plan and the child does not satisfy the requirements under Code section 152, the employer must impute income to the employee for the fair market value of coverage paid by the employer and withhold Wisconsin state tax. This Wisconsin state tax treatment would also apply to any pre-tax contributions paid by the employee for health coverage of a dependent child through a cafeteria plan.