On September 25, 2008, President Bush signed into law the ADA Amendments Act of 2008. The Act carries out the Americans with Disabilities Act’s objectives of providing a clear and comprehensive national mandate for the elimination of discrimination and clear, strong, consistent and enforceable standards addressing discrimination by reinstating a broad scope of protection to be available under the ADA which had been narrowed by the courts since the passage of the ADA. The Act is effective on January 1, 2009.
“Disability” under the Act
Section 4 of the Act amends the ADA to redefine the term "disability," by also defining "major life activities" and "being regarded as having such an impairment." Additionally, it sets forth rules of construction regarding the definition of "disability," including that: (1) such term shall be construed in favor of broad coverage of individuals under the Act; (2) an impairment that substantially limits one major life activity need not limit other major life activities in order to be a disability; (3) an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active; and (4) the determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of specified mitigating measures.
Discrimination on the Basis of Disability
The Act prohibits employment discrimination against a qualified individual “on the basis of disability.” Current law prohibits employment discrimination against a qualified individual with a disability because of the disability. The Act also prohibits the use of qualification standards, employment tests, or other selection criteria based on an individual's uncorrected vision unless the standard, test, or other selection criteria, as used by the covered entity, is shown to be related to the position and is consistent with business necessity.
Rules of Construction
Section 6 of the Act declares that nothing in the Act: (1) alters the standards for determining eligibility for benefits under state worker's compensation laws or under state and federal disability benefit programs; (2) alters the requirement to make reasonable modifications in policies or procedures, unless such modifications would fundamentally alter the nature of the goods, services, facilities, or accommodations involved; or (3) provides the basis for a claim by an individual without a disability that the individual was subject to discrimination because of the individual's lack of disability.
Conforming Federal Regulations
The Act clarifies that the authority of the Equal Employment Opportunity Commission (EEOC), the Attorney General, and the Secretary of Transportation to issue regulations includes the authority to issue regulations implementing the definitions of this Act.
Rehabilitation Act of 1973
Finally, the Act makes conforming amendments to certain definitions within the Rehabilitation Act of 1973.
For a copy of the new law, see: www.govtrack.us/congress/billtext.xpd?bill=s110-3406
Amended Definition of "Dependent"
The Working Families Tax Relief Act of 2004 (“WFTRA”)† and the Fostering Connections to Success and Increasing Adoptions Act of 2008 (“Adoptions Act”)‡ include, among numerous other things, a revised definition of dependent under Section 152 of the Internal Revenue Code (“IRC”) which may impact certain employee benefit plans.
Amended Definition of Dependent under WFTRA and the Adoptions Act
Section 201 of WFTRA (effective for taxable years beginning January 1, 2005) and Section 501 of the Adoptions Act (effective for taxable years beginning January 1, 2009) amended the definition of dependent in Section 152 of the IRC. Pursuant to amended Section 152, an individual must be either a “qualifying child” or a “qualifying relative” to be a dependent.
Qualifying Child
A Qualifying Child must meet all of the following:
- Is the employee’s daughter, son, stepchild, stepsibling, or a descendant of any of these individuals;
- Has the same principal abode as the employee for over half the year;
- Is younger than the employee*, is under age 19 at the end of the year, or if a full-time student, under age 24 at the end of the year, or disabled;
- Does not provide more than half of his or her own support; and
- Must be unmarried.*
The Adoptions Act also provides that an individual will be treated as the qualifying child of a nonparent if no parent claims the individual as a qualifying child and the nonparent has a higher adjusted gross income than any parent.
Qualifying Relative
A Qualifying Relative must meet all of the following:
- Is not a Qualifying Child;
- Is a relative of the employee, or has the same principal place of abode as the employee and is a member of the employee’s household;
- Has gross income under $3,500 for 2008; and
- Receives more than half of his or her support from the employee.
Potential Impact on Employee Benefit Plans
Given the changes outlined in WFTRA and the Adoptions Act, employers should review the amended definition of dependent and determine whether it will have any impact on their employee benefit plans, both for health and non-health benefits (e.g., compare their plans’ definition of dependent with the revised statutory definition). Where an employee benefit plan has a more stringent definition of dependent, which may often be the case, the employee benefit plan will not be impacted by WFTRA or the Adoptions Act.
While Congress intended to establish a uniform definition of dependent for personal income tax purposes, it has made it more difficult for employers to administer their employee benefit plans. Because the impact of WFTRA and the Adoptions Act is complex, employers are encouraged to seek assistance from outside counsel if they have any questions or are unsure if their plans require amendment.
Further, in the event an employer wishes to cover individuals not considered dependents under the revised IRS definition, the plan could be changed. However, the employer must understand and communicate to its employees the tax consequences of doing so.
†A copy of WFTRA http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_bills&docid=f:h1308enr.txt.pdf
‡ Adoptions Act http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h6893enr.txt.pdf
*Pursuant to the Adoptions Act.