1099 for Insurance Premium Payment?

[TB12]

If a company reimburses an employee for premiums paid for medical coverage for his/her spouse, is the company required to send a 1099 to the employee or the employee's spouse? The company should have been paying the spouse's insurance premium as it's part of the employee benefit package, but did not due to an oversight and is now making a reimbursement (about $3,000). Based on what I've ready, I'm thinking no, but would really like (and appreciate!) some additional insight.

Thanks!

[Possi]

I think not...

I bet that $3000 will be reflected in the W2 as benefits, or else it is not a taxable event.

[Burke]

It seems to me that if the company is just rectifying a mistake, and the premiums would have originally been a non-taxlable fringe benefit to the employee, then no 1099 should be given. Besides, if it were deemed to be taxable income, you do not issue a 1099, but include it in the W-2 subject to FICA & FWT.

[Possi]

yes...

It seems to me that if the company is just rectifying a mistake, and the premiums would have originally been a non-taxlable fringe benefit to the employee, then no 1099 should be given. Besides, if it were deemed to be taxable income, you do not issue a 1099, but include it in the W-2 subject to FICA & FWT.

I think that is what I said, only not so clearly!!

[Bees Knees]

In general, there are two ways that employer paid medical benefits are excluded from the employee’s income:

1) The employer reimburses the employee for medical expenses paid by the employee [IRC §105(b)], or

2) The employer directly pays the insurance premium on behalf of the employee (IRC §106).

If the employer reimburses the employee for medical expenses (including reimbursing insurance premiums), the medical reimbursement plan must be in writing [Reg. §1.105-11(b)(1)(i)].

It appears that this particular employer was supposed to be directly paying the health insurance for the employee and the employee’s spouse under Section 106. However, due to an error, the employer had to reimburse the employee for the spouse’s health insurance premiums. Technically, under the law, the reimbursement is only excludable from income if the employer has a written plan in place that accommodates this type of situation. In any case, it is always advisable to have some type of written policy in place that spells out the terms of an employee fringe benefit, even if the law does not always require it.

[TB12]

Thanks!

I just wanted to say "Thank You" to all of you for your replies!