A recently released internal IRS memorandum has clarified how the tax code will treat cash benefits paid from voluntary hospital indemnity plans.
Issued from the office of the IRS General Counsel, the memo addresses the tax exposure of employer payments to indemnity plans and in cases where the employee premiums are deducted from the employee's income through a 125 cafeteria plan.
In each of those cases, the benefits are taxable and employers must report them as paid income, according to the memo.
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