Treasury, IRS Want to Clarify Fixed Health Payment Treatment (1)

Treasury and IRS Friday proposed amending existing regulations on the treatment of certain fixed payments from accident and health insurance plans as part of gross income.

The proposal (RIN:1545-BQ28) spells out that payments made by accident or health insurance are excluded from a taxpayer’s gross income only if those payments helped to cover medical expenses.

The IRS is targeting fixed indemnity benefits and specified disease excepted benefits, though the scope of the proposals would go beyond these types of coverage. This insurance pays out a pre-determined amount to an employee on a regular basis if it’s triggered by ...