Illinois recently passed House Bill 5258, which requires that group health plan issued, amended, or renewed in the state offer coverage to parents and stepparents in limited circumstances.

Qualifying Relative

According to the IRS, a qualifying relative must first meet the general rule for dependents. That means they must be:

• A dependent must be a U.S. citizen, resident alien or national or a resident of Canada or Mexico
• A person can't be claimed as a dependent on more than one tax return, with rare exceptions
• A dependent can't claim a dependent on their own tax return

In addition, the qualifying relative must pass these tests:

• Not a qualifying child: Isn't your qualifying child or the qualifying child of any other taxpayer
• Member of household or relationship: Lives with you all year as a member of your household or is a specific type of relative
• Gross income: Has gross income under $5,050
• Support: Gets more than half their financial support from you

Pre-tax Contributions? What about COBRA?

If all of these requirements are met, and the employer has a Section 125 plan in place, the employee can pay premiums pre-tax for all tax dependents. However, loss of coverage for a parent or step-parent would not be a COBRA qualifying event. COBRA applies only to employees, spouses, or dependent parents. Whether Illinois State Continuation law will apply remains to be determined.

For a summary of the latest updates, visit the Federal Policy Hub for Employers and connect with one of our employee benefits consultants or HR experts to ensure you always remain compliant.