Employee medical expense reimbursement

Technical topics regarding tax preparation.
#1
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59
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24-Jan-2017 1:57am
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Guam
Dear all,

Is employer reimbursement of medical expense for an employee taxable and included in his/her W-2 box 1 when the employer is not providing any type of accident or health insurance benefit?
 

#2
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1121
Joined:
12-May-2021 11:01am
Location:
Alabama
You have a contradiction. If the employer is reimbursing an employee's medical expense, then the employer is providing a type of accident or health insurance benefit.

Assuming this isn't a worker's compensation issue (medical treatment for an injury on the job), then you'll need to follow the HRA rules, such as:
In order for this to be nontaxable, you need a written HRA plan document that specifies what kinds of medical expenses are reimbursable, any limits on reimbursement, and which employees are eligible.
You can't make rank-and-file employees ineligible if the owners, etc. are eligible.
If the HRA provides benefits to 2 or more employees, then the HRA must provide Minimum Essential Coverage (MEC), or else there's a penalty tax of $100 per employee per day. This is true regardless of whether the medical benefit is taxable or nontaxable; however, note that it does not apply if there's only 1 employee receiving a benefit (and the owner of the company doesn't count as an employee here, except with a C corporation).
Etc.
 

#3
Posts:
59
Joined:
24-Jan-2017 1:57am
Location:
Guam
beardenjv wrote:You have a contradiction. If the employer is reimbursing an employee's medical expense, then the employer is providing a type of accident or health insurance benefit.

Assuming this isn't a worker's compensation issue (medical treatment for an injury on the job), then you'll need to follow the HRA rules, such as:
In order for this to be nontaxable, you need a written HRA plan document that specifies what kinds of medical expenses are reimbursable, any limits on reimbursement, and which employees are eligible.
You can't make rank-and-file employees ineligible if the owners, etc. are eligible.
If the HRA provides benefits to 2 or more employees, then the HRA must provide Minimum Essential Coverage (MEC), or else there's a penalty tax of $100 per employee per day. This is true regardless of whether the medical benefit is taxable or nontaxable; however, note that it does not apply if there's only 1 employee receiving a benefit (and the owner of the company doesn't count as an employee here, except with a C corporation).
Etc.


Thank you for the clarification. Much appreciated.
 


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