Is Medical Insurance Tax Free?

Is Medical Insurance Tax Free?

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If it is purchased by the employee, everything is tax free. But what if it is purchased by the taxpayer’s employer?

Below are some quick and dirty rules for employer-purchased medical insurance.

  1. Employer-paid premiums is excludable from gross income.
  2. Amount recovered under medical policy is excludable from gross income.
  3. Amount recovered under a medical policy for loss of a function or for disfigurement is excludable from gross income.
  4. Any additional amounts paid under the policy are not excluded from income.

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