Obamacare requires coverage to be extended to age 26. However, regulations anticipate that some employers typically extended coverage until the end of the year in which a child reached the age limit – typically between age 22 and 25.
Because of this, if coverage is extended to the end of the year after reaching age 26 the value of the coverage will remain tax-free.
In other words, it’s up to the health plan whether to stop coverage at age 26 or at end of the year (or something in between).
Keep in mind also that beginning in 2014, health plans must allow enrollment of an adult child even if the child is employed with health insurance available.
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