11.5.7 Tax Treatment of Group Health Plans
Group premium payments made by an employer are tax deductible to the employer and do not count as income to the employee. Premium payments made by the employee are not tax deductible if they are paid with after-tax dollars.
However, if the insured's out-of-pocket expenses exceed 10% of the individual's adjusted gross income, a tax deduction can be taken for expenses over and above the 10% mark.
The government bestows this tax advantage to provide incentive for employers to offer health insurance to their employees.
Any benefit an individual receives under a medical expense plan is not considered taxable income; however, disability benefit payments that are attributed to employer contributions are taxable.
