A recently released internal IRS memorandum has clarified how the tax code will treat cash benefits paid from voluntary hospital indemnity plans.
Issued from the office of the IRS General Counsel, the memo addresses the tax exposure of employer payments to indemnity plans and in cases where the employee premiums are deducted from the employee's income through a 125 cafeteria plan.
In each of those cases, the benefits are taxable and employers must report them as paid income, according to the memo.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
