The Age 26 Requirement
The ACA requires employer health plans to offer coverage to dependent children up to age 26. This requirement is absolute — it applies regardless of the child's student status, marital status, financial dependence, residency, or tax dependency status. Plans cannot impose conditions on adult child coverage that are not imposed on other dependents.
Tax Treatment of Adult Child Coverage
The tax treatment of adult child coverage depends on whether the child qualifies as a tax dependent. Coverage for children under age 27 is excluded from the employee's income regardless of tax dependency status. This means employers can offer coverage to adult children up to age 26 without any tax consequences for the employee.
COBRA at Age 26
Compliance Note
When a dependent child loses coverage at age 26, this is a COBRA qualifying event. The plan must offer the child COBRA continuation coverage for up to 36 months. The COBRA election notice must be sent within 14 days of the plan administrator receiving notice of the qualifying event (the child's 26th birthday). Confirm your COBRA administrator is tracking age 26 terminations and sending timely election notices.