Group Health Insurance

Employer paid premiums for employee medical insurance are deductible by the company whether the coverage is under a group policy or individual policies.

The employee need not report the amount paid by the employer as current income.

When an employee pays the premium and is then reimbursed by the employer, the amount received is not included in the employee's gross income.

Benefits paid under the insurance plan, which reimburse the employee for payments made for hospital, surgical or other medical expenses, are not included in the employee's gross income.

Group medical plans are an attractive fringe beneft because personally paid medical insurance premiums and medical expenses are only deductible in excess of 7.5% of the taxpayer's adjusted gross income.

The Health Care Portability and Accountability Act of 1996, signed into law on August 21,1996, expanded the availability of coverage under group health plans. Effective with plan years beginning after June 30, 1997, the Act:

1. Limits exclusions for pre-existing conditions;
2. Prohibits discrimination in eligibility or premiums solely on the basis of an individual's health situation.
3. Guarantees renewability for those employers sharing in multi-employer plans; and
4. Provides penalties for employers who do not comply with the law.

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