Open Enrollment: Beware - Dependent Definition May Not Be What You Intend

As we explained in our November 2004 One Minute Memo, which can be accessed by clicking here, the Working Families Tax Relief Act of 2004 (Act) changed the definition of “dependent” under Section 152 of the Internal Revenue Code (Code) for various tax purposes. The changes, which took effect January 1, 2005, are forcing employers faced with upcoming enrollment periods for health and dependent care plans and health spending accounts to review coverage under their employee benefit programs with a careful eye for technical changes. This Management Alert highlights some of the pitfalls if the new Code Section 152 is not fully understood.