Amounts received under accident and health plans
Amounts attributable to employer contributions
Amounts expended for medical care
Payments unrelated to absence from work
Gross income does not include amounts referred to in subsection (a) to the extent such amounts—
constitute payment for the permanent loss or loss of use of a member or function of the body, or the permanent disfigurement, of the taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), and
are computed with reference to the nature of the injury without regard to the period the employee is absent from work.
Repealed. Pub. L. 98–21, title I, § 122(b), Apr. 20, 1983, 97 Stat. 87]
Accident and health plans
For purposes of this section and section 104—
amounts received under an accident or health plan for employees, and
amounts received from a sickness and disability fund for employees maintained under the law of a State or the District of Columbia,
shall be treated as amounts received through accident or health insurance.
Rules for application of section 213
Self-employed individual not considered an employee
Amount paid to highly compensated individuals under a discriminatory self-insured medical expense reimbursement plan
In general
Prohibition of discrimination
A self-insured medical reimbursement plan satisfies the requirements of this paragraph only if—
the plan does not discriminate in favor of highly compensated individuals as to eligibility to participate; and
the benefits provided under the plan do not discriminate in favor of participants who are highly compensated individuals.
Nondiscriminatory eligibility classifications
In general
A self-insured medical reimbursement plan does not satisfy the requirements of subparagraph (A) of paragraph (2) unless such plan benefits—
70 percent or more of all employees, or 80 percent or more of all the employees who are eligible to benefit under the plan if 70 percent or more of all employees are eligible to benefit under the plan; or
such employees as qualify under a classification set up by the employer and found by the Secretary not to be discriminatory in favor of highly compensated individuals.
Exclusion of certain employees
For purposes of subparagraph (A), there may be excluded from consideration—
employees who have not completed 3 years of service;
employees who have not attained age 25;
part-time or seasonal employees;
employees not included in the plan who are included in a unit of employees covered by an agreement between employee representatives and one or more employers which the Secretary finds to be a collective bargaining agreement, if accident and health benefits were the subject of good faith bargaining between such employee representatives and such employer or employers; and
employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d)(2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a)(3)).
Nondiscriminatory benefits
Highly compensated individual defined
For purposes of this subsection, the term “highly compensated individual” means an individual who is—
one of the 5 highest paid officers,
a shareholder who owns (with the application of section 318) more than 10 percent in value of the stock of the employer, or
among the highest paid 25 percent of all employees (other than employees described in paragraph (3)(B) who are not participants).
Self-insured medical reimbursement plan
Excess reimbursement of highly compensated individual
For purposes of this section, the excess reimbursement of a highly compensated individual which is attributable to a self-insured medical reimbursement plan is—
in the case of a benefit available to highly compensated individuals but not to all other participants (or which otherwise fails to satisfy the requirements of paragraph (2)(B)), the amount reimbursed under the plan to the employee with respect to such benefit, and
in the case of benefits (other than benefits described in subparagraph (A) 1
the numerator of which is the total amount reimbursed to all participants who are highly compensated individuals under the plan for the plan year, and
the denominator of which is the total amount reimbursed to all employees under the plan for such plan year.
In determining the fraction under subparagraph (B), there shall not be taken into account any reimbursement which is attributable to a benefit described in subparagraph (A).
Certain controlled groups, etc.
Regulations
Time of inclusion
Sick pay under Railroad Unemployment Insurance Act
Special rule for certain governmental plans
In general
Plan described
An accident or health plan is described in this paragraph if such plan is funded by a medical trust that is established in connection with a public retirement system or established by or on behalf of a State or political subdivision thereof and that—
has been authorized by a State legislature, or
has received a favorable ruling from the Internal Revenue Service that the trust’s income is not includible in gross income under section 115 or 501(c)(9).
Qualified taxpayer
For purposes of paragraph (1), with respect to an accident or health plan described in paragraph (2), the term “qualified taxpayer” means a taxpayer who is—
an employee, or
the spouse, dependent (as defined for purposes of subsection (b)), or child (as defined for purposes of such subsection) of an employee.
Source
(Aug. 16, 1954, ch. 736, 68A Stat. 30; Pub. L. 87–792, § 7(e),Notes
References in Text
Amendments
Effective Date of 2015 Amendment
Effective Date of 2014 Amendment
Effective Date of 2008 Amendment
Effective Date of 2004 Amendment
Effective Date of 1989 Amendment
Effective Date of 1986 Amendment
Effective Date of 1984 Amendment
Effective Date of 1983 Amendment
Effective Date of 1982 Amendment
Effective Date of 1981 Amendment
Effective Date of 1980 Amendment
Effective Date of 1978 Amendment
The amendments made by paragraphs (1) and (2)(A) [amending this section and provisions set out as a note under this section] shall take effect as if included in section 105(d) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] as such section was amended by section 505(a) of the Tax Reform Act of 1976.
The amendments made by paragraph (2)(B) [amending provisions set out as notes under this section] shall take effect as if included in section 301 of the Tax Reduction and Simplification Act of 1977 [Pub. L. 95–30, title III, § 301,
Effective Date of 1976 Amendment
Effective Date of 1964 Amendment
Effective Date of 1962 Amendment
Nonenforcement of Amendment Made by Section 1151 of Pub. L. 99–514 for Fiscal Year 1990
Revocation of Election
Period for Assessing Deficiency
Effective Date of Changes in Exclusion for Sick Pay
with respect to any taxpayer who makes or has made an election under section 105(d)(6) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] or under section 505(d) of the Tax Reform Act of 1976 [set out below] (as such sections were in effect before the enactment of this Act [
with respect to any taxpayer (other than a taxpayer described in paragraph (1)) who has an annuity starting date at the beginning of a taxable year beginning in 1976 by reason of the amendments made by section 505 of the Tax Reform Act of 1976 [amending this section and section 104 of this title and enacting provisions set out as notes under this section] (as in effect before the enactment of this Act [
Special Rule for Existing Permanent and Total Disability Cases
“In the case of any individual who—
retired before
either retired on disability or was entitled to retire on disability, and
on
such individual shall be deemed to have met the requirements of section 105(d)(1)(B) of such Code (as amended by subsection (a) of this section).”
Special Rule for Coordination With Section 72 of This Title
“In the case of an individual who—
retired on disability before
on
for purposes of section 72 the annuity starting date shall not be deemed to occur before the beginning of the taxable year in which the taxpayer attains age 65, or before the beginning of an earlier taxable year for which the taxpayer makes an irrevocable election not to seek the benefits of such section 105(d) for such year and all subsequent years.”