Mandated Benefits FAQs

Employer Mandated Benefits

How is the definition of a dependent under the new Dependent to Age 27 mandate different than the Trust’s current dependent language?

Currently, a school may select from among several optional definitions of covered dependent children. The standard option provides all dependents with coverage until the end of the month in which their 25th birthday occurs, as long as their earnings are less than the required income limit. Other options include a requirement that the dependent remain a full-time student in order to retain coverage.

To which employee benefits do the mandates apply?

Wisconsin's Dependent to Age 27 mandate affects both health and dental coverage. The other mandates, such as hearing aids/cochlear implants (for children under 18), autism, mental health parity, and married dependents to age 26 (federal health care reform law) only affect health coverage.

How can we calculate the fair market value of health and dental insurance benefits as they relate to the Dependent to Age 27 mandate? Is there a source we can turn to?

Wisconsin’s Department of Employee Trust Funds (ETF), which is responsible for managing welfare and retirement benefits for state and public employees, has published a document (that is regularly updated) that lists the criteria the state is using to calculate the value of dependent coverage. Many school districts are likely to follow ETF’s methodology.

ETF’s guidelines can be found on the Web at: http://etf.wi.gov/publications/dependent_mandate_2010.pdf

How can I identify if my employees are covering a non-tax qualified dependent?

Communication between administration and employees is very important. Ask your staff to inform you of any dependents being added to their coverage. Upon request, the Trust can provide you with a listing of all dependents covered under your health and/or dental plan, who are over age 19. You may then use this information to start a dialogue with your employees.

What is the formula for imputing taxable income?

In determining imputed taxable income, the amount that the employee is required to contribute toward the plan premium (if any) must be taken into account. The fair market value of covering a non-tax qualifying dependent must be reduced by the increased premium contribution that the employee is required to pay for such coverage to arrive at the amount of imputed taxable income. For example, say an employer determines that the value of providing coverage to a non-tax qualifying dependent is $500 a month. However, in order for the employee to add the dependent to his or her plan, the employer requires the employee to contribute $100 for the dependent’s insurance. Then, according to the IRS, the employee’s imputed income will be ($500 - $100) $400.

Can our employees access the mandated benefits now?

Your employees will be eligible for the mandated benefits at the time of your insurance contract renewal or a mid-year contract change.

Member Mandated Benefits

What are the eligibility requirements for an adult child to be covered under Wisconsin's Dependent to Age 27 mandate? What about under the new federal health care reform law?

Under the Wisconsin mandate, your adult child is eligible for coverage under your WEA Trust health and/or dental plan if he or she is:

• 27 years of age or younger.
• Not married.
• Not eligible for health insurance under an employer-sponsored plan with a required contribution that is less than your cost to cover your child under your Trust plan.

In addition, children older than age 27 may still be covered under your Trust health plan if they were attending school as a full-time student and were called to active military duty when they were under the age of 27.

Under the new federal health care reform law, your married or unmarried adult child is eligible for coverage under your WEA Trust health plan until the end of the month in which he or she turns age 26.

When can I add my dependent to my health and/or dental coverage?

If you have a dependent who was not previously eligible for coverage, but is now eligible due to the mandate criteria, he or she may be added to your health or dental coverage when your district renews its insurance contract with the Trust.

How much time do I have to enroll my dependents, if they are eligible, to my health and/or dental plan?

You have 30 days after the effective date of your district’s renewal or mid-contract change to enroll your dependent.

What are the tax consequences to me if I add my dependent(s) to my health and/or dental insurance coverage?

There may be tax consequences to you when providing insurance coverage for adult children who do not qualify as your dependent for income tax purposes. Because your situation can be unique, you should consult with your tax advisor. Information is also available on the Wisconsin Department of Revenue and the Internal Revenue Service Web sites, revenue.wi.gov and irs.gov. Since the law governing the taxation of the coverage of adult children is changing rapidly, periodic updates to these Web sites should be expected.

Why am I getting taxed on this?

The fair market value of the insurance coverage for your adult child is considered by the IRS as income to you, and therefore taxable.

Do I need to notify my employer if I add a non-tax qualified dependent to my health and/or dental coverage?

Yes, for tax purposes, your employer needs to know if you are adding dependents to your coverage.