Code Section 401

Code Section	Effective Date	Name of Act	Name of Provision	10yr Revenue Estimate ($millions)
105, 162, 401, 501	3/30/2010	Health Care and Education Reconciliation Act of 2010	Adult Dependents	*See Note Below

*Note on Revenue Estimate

See table 3 of CBO estimate letter addressed to Speaker Pelosi on March 20, 2010, http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/113xx/doc11379/amendreconprop.pdf

Adult Dependents

Explanation of Provision

The provision amends section 105(b) to extend the general exclusion for reimbursements for medical care expenses under an employer- provided accident or health plan to any child of an employee who has not attained age 27 as of the end of the taxable year. This change is also intended to apply to the exclusion for employerproved coverage under an accident or health plan for injuries or sickness for such a child. A parallel change is made for VEBAs and 401(h) accounts.

The provision similarly amends section 162(l) to permit self-employed individuals to take a deduction for the cost of health insurance for any child of the taxpayer who has not attained age 27 as of the end of the taxable year.

For purposes of the provision, ‘‘child’’ means an individual who is a son, daughter, stepson, stepdaughter or eligible foster child of the taxpayer.⁹⁷³ An eligible foster child means an individual who is placed with the taxpayer by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

973- Sec. 152(f)(1). Under section 152(f)(1), a legally adopted child of the taxpayer or an individual who is lawfully placed with the taxpayer for legal adoption by the taxpayer is treated as a child of the taxpayer by blood.
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