Adding adult children to health care policies means more taxes for Californians

The Sacramento BeeFebruary 7, 2011 

Thousands of California parents leaped at the chance to provide health coverage to their grown and uninsured children when a provision in the federal health care law took effect last fall.

Now some of those parents, such as Barry Demant of Folsom, are finding a hidden cost to the new benefit: a bigger tax bill.

A loophole in California's tax law requires the state to levy income taxes on the premiums employers pay to provide health insurance to the non-dependent children of their workers.

Last fall, Demant added his unemployed 25-year-old daughter to his company's group health plan. That meant he no longer had to pay $180 a month to insure her through a separate individual health policy.

As part of the federal health care law, insurers are required to allow parents to enroll children up to age 26 on their health plans.

"I wanted to give the health care law a chance, and I thought it would be a great opportunity, even if only selfishly, to reduce the amount I pay for her premiums," Demant said.

He found out about the tax when his human resources department told him that a bump in income – and taxes – would soon appear in his paycheck.

In the end, he said, some of the money he thought he was saving could evaporate in the form of increased state tax payments. Demant would not say exactly how much more he'll be paying in taxes.

To read the complete article, visit www.sacbee.com.

McClatchy Washington Bureau is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service