KPMG report: Tax-free fixed indemnity healthcare for employees
How proposed regulations would put employer-provided fixed indemnity health coverage under a regime similar to employer-provided disability insurance
How proposed regulations would put employer-provided fixed indemnity health coverage
Recently proposed regulations (REG-120730-21) would amend the definition of “short-term, limited-duration insurance,” which is excluded from the definition of “individual health insurance coverage” under the Public Health Service Act. Read TaxNewsFlash
The proposed regulations [PDF 1.1 MB] would eliminate an employer’s ability to provide (or an employee’s ability to pay for) fixed indemnity health coverage on a pre-tax basis while also providing (or receiving) nontaxable benefits. In essence, the proposed regulations would classify employer-provided fixed indemnity health coverage not as health insurance but as income replacement that must be taxed when paid to the insured employee and subject to wage reporting and withholding.
Read a November 2023 report* [PDF 1.8 MB] prepared by KPMG LLP tax professionals that explains how the proposed regulations would put employer-provided fixed indemnity health coverage under a regime that is similar to employer-provided disability insurance.
* This article appears in Tax Notes Federal (November 27, 2023) and is provided with permission.
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