IRS Opines on the Tax Treatment of Employer-Funded, Insured, Fixed-Indemnity Wellness Policies

In light of recent Internal Revenue Service (IRS) guidance, employers should carefully examine any supplemental health plan, program or arrangement (which may or may not claim to leverage fixed indemnity insurance) that promises substantial payroll tax savings. In a legal advice memorandum, the IRS’s Office of Chief Counsel addressed and rejected the claimed tax treatment and purported advantages of certain “wellness indemnity” payments under an employer-funded hospital indemnity or other fixed indemnity insurance policy. The arrangement described in the memo is similar to other so-called “double dipping” arrangements that the IRS has previously rejected.

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Jacob Mattinson
Jacob M. Mattinson focuses his practice on employee benefits and matters related to 401(k), 403(b), pension, executive compensation, health care reform, and cafeteria and welfare plans. Jacob assists clients in drafting employee benefit plan documents and amendments. He represents clients in matters before the Internal Revenue Service (IRS), US Department of Labor (DOL) and Pension Benefit Guaranty Corporation with respect to plain qualification issues. Read Jacob Mattinson's full bio.

Sarah Raaii
Sarah G. Raaii focuses her practice on employee benefits and matters related to health care reform, data privacy and HIPAA compliance, executive compensation, and health and welfare, cafeteria, 401(k), 403(b) and pension plans. Read Sarah Raaii's full bio.

Alden Bianchi
Alden J. Bianchi is an experienced Employee Benefits and Executive Compensation lawyer who advises corporate, not-for-profit, governmental and individual clients on a broad range of executive compensation and employee benefits matters, including qualified and non-qualified retirement plans, health and welfare plans. Read Alden Bianchi's full bio.

Teal Trujillo
Teal Trujillo focuses her practice on employee benefits and executive compensation matters for public and private companies. She regularly leads due diligence and advises on liability related to retirement plans, health and welfare plans and executive compensation in stock purchase and asset purchase transactions. Read Teal Trujillo's full bio.




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