Pretax Premiums May Have Employees Singing Post-Tax Blues
By Matt Gerard ( May 24, 2017, 12:52 PM EDT) -- Employers who offer fixed-indemnity health coverage or wellness programs to their employees may consider reassessing how that coverage is administered in view of a recent Internal Revenue Service internal memorandum that examines the tax treatment of benefits paid by fixed-indemnity health plans. The Office of Chief Counsel Memorandum states that payments made to participants under certain fixed-indemnity health plans (and certain wellness programs) must be included in employees' gross income, unless the premiums for such plans are paid on an after-tax basis. However, the memorandum does not address how employers should administer these taxable fixed-indemnity payments....
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