Merritt Personal Lines Manual: Chapter 2 Tax Considerations
There are two times in health insurance when there may be tax considerations: in the payment of premiums and the receipt of benefits.
Tax Treatment of Individual Health Insurance
| Premiums | Benefits | |
| Medical Expense | Not tax deductible | Received tax free |
| Disability Income | Not tax deductible | Received tax free |
| Long Term Care | Tax deductible | Received tax free |
Tax Treatment of Group Health Insurance
| Premiums (paid by employer) | Benefits | |
| Medical and Dental Expense | Tax deductible for the employer, not considered as income for the employee | Received tax free |
| Accidental Death | Tax deductible for the employer, not considered as income for the employee | Received tax free |
| Disability Income | If the policy is individually owned, but the employer pays the premium, the premiums must be included in the taxable earnings of the employee | Received tax free |
| Long Term Care | Tax deductible for the employer | Received tax free |
Self employed individuals can deduct their health insurance premiums as business expenses. In the early 2000s, they could deduct 70 percent; since 2003, they have been able to deduct 100 percent.
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