332 / Is the value of employer-provided coverage under accident or health insurance taxable income to an employee?
Generally, no.
This includes medical expense and dismemberment and sight loss coverage for the employee, his or her spouse and dependents, and coverage providing for disability income for the employee ( Q 380). There is no specific limit on the amount of employer-provided coverage that may be excluded from an employee’s gross income. Coverage is tax-exempt to an employee.1 The employer may contribute to an accident or health plan by paying the premium (or a portion) on a policy of accident or health insurance covering one or more employees, or by contributing to a separate trust or fund which provides accident or health benefits directly or through insurance to those employees.2 Coverage under an uninsured plan is explained in Q 8794.
Likewise, the value of critical illness coverage is not taxable income to an employee.