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Are reimbursed health care premiums taxable to the employee?

David  Nassif's Profile

I help with a small non-profit with less than 10 employees. If we simply reimburse employees for their health care premiums on policies they themselves pay is that money taxable to them? If so, is there a way to get around that? Thanks


(President/CEO) |

Establish a medical or health savings account (HSA or MSA) for each employee. The organization could disperse a set dollar amount to each individual account which the employee can utilize for their health/dental care premium costs. The non-profit will need a policy to outline the eligibility criteria, amount of benefit, and the rules of the plan. The organization would need to build a plan rule for the event if the individuals receiving the entitlement do not fully utilize the funds by a certain date, the funds are returned to the non-profit-a use or lose clause. Please check with a local health insurance company for additional information and guidelines on these health savings plans. A health insurance agent will have all rules and details as I am just an amateur. My company utilizes a similar plan.

Karen Adams
Title: Owner
Company: KJA Associates, LLC
(Owner, KJA Associates, LLC) |

We have been advised by our external tax advisor that effective 1/1/14 medical premium reimbursements as you describe need to be paid on a taxable basis. The HSA/MSA described above seems to be a possible solution to making reimbursements tax free.


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