Tony Novak profile picture
  "AskTony" column archive        


Most Popular

AskTony Archive

This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

The author is paid for product endorsements and has an ownership or other financial interest in the businesses related to the topics covered.

New questions

Submit consumer finance questions at and health insurance questions at

Sponsored by: Insurance Exchange - your source of valuable information on state and federal health reform benefits.

Core Health Insurance - America's favorite mini-med insurance  with affordable premiums, freedom to choose providers, optional PPO discounts and guaranteed eligibility regardless of medical conditions.

Please support the Web sites that make publication of AskTony services possible.

Tax-free reimbursement of health premiums

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If in doubt, please send a new question or ask for an update.

Q: Your online website indicates that amounts paid by an employer to reimburse the employee for health insurance are non-taxable. This makes sense to me. The cash amount I receive all goes toward payment of my health insurance from a previous employer. My current employer indicates they have consulted a tax attorney and the reimbursement needs to be treated as taxable income. What specific language in the IRS regulations can I use to convince my current employer that the amounts are non-taxable?

A: It seems like your employer does not want to include this type of reimbursement as part of your employee benefits and it is their right to decline to do so. Employers are not required to provide health benefits or to offer tax-free reimbursement of health insurance. This is completely at the option of the employer. There might have been some miscommunication about the adviser in this case; tax attorneys generally handle litigation matters but do not provide advice on the setup and operational procedures of health benefit plans. If the employer wants advice or help with the set-up of a health reimbursement plan then a payroll tax expert or employee benefit specialist is appropriate. This tax-free reimbursement plan is usually available through the company that provides your payroll service. If your employer is a small business, then this service is available at minimal fee through Your employer may be concerned about larger issues; for example how such a benefit plan would interact with the other employee benefits or how a change at this time might affect a previous business contact with a benefit plan service provider. It is very possible that the employer simply does not want to pay the extra cost of administering a health reimbursement plan. In any event, the employer is under no obligation to discuss its planning or management rationale with employees so we may never know the real concern. We may see a change in federal tax law this year that would make health insurance premiums deductible directly by individuals on their own tax return.


More resources: