If it is purchased by the employee, everything is tax free. But what if it is purchased by the taxpayer’s employer?
Below are some quick and dirty rules for employer-purchased medical insurance.
- Employer-paid premiums is excludable from gross income.
- Amount recovered under medical policy is excludable from gross income.
- Amount recovered under a medical policy for loss of a function or for disfigurement is excludable from gross income.
- Any additional amounts paid under the policy are not excluded from income.