Tax Question about COBRA Reimbursement

[poncherelli2]

I have a question about the tax implications of a new employer (who doesn't yet offer health insurance) paying COBRA insurance premiums for someone to maintain his old employer's insurance benefits until a plan is established.

Some internet research seems to indicate that this arrangement can be structured in such a way to avoid classifying the premium payment as income. Do any of the resident accountants/ tax experts have any further insight on this issue and advice on how to handle the payments by the new employer? Thanks.

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admin allisolm

 

[sactoking]

The new employer needs to either pay the premium themselves or reimburse the employee after proof of payment is provided. If the employer can show that they paid the premium or the payment was for reimbursement of expenses incurred it is not income to the employee. If it cannot be proved that the money was used to pay the premiums, like if the employer just wrote a check with no proof of payment of the premiums, then it is taxable income to the employee.

 

[SandEagle]

https://www.youtube.com/watch?v=rUw8cN6R8o0

 

[poncherelli2]

The new employer needs to either pay the premium themselves or reimburse the employee after proof of payment is provided. If the employer can show that they paid the premium or the payment was for reimbursement of expenses incurred it is not income to the employee. If it cannot be proved that the money was used to pay the premiums, like if the employer just wrote a check with no proof of payment of the premiums, then it is taxable income to the employee.

In the case of an employee paying the premium and seeking reimbursement, would this be similar to any other ordinary expense (e.g. travel), where he is issued a separate expense payment which is not subject to taxation or included in W2 wages?

 

[sixone]

This is a tax question, not a COBRA question. If you change your title, you might get more/better help.

I know more about COBRA than taxes. Sorry I can't be more help.

 

[poncherelli2]

This is a tax question, not a COBRA question. If you change your title, you might get more/better help.

I know more about COBRA than taxes. Sorry I can't be more help.

Just did, thanks!

 

[sactoking]

In the case of an employee paying the premium and seeking reimbursement, would this be similar to any other ordinary expense (e.g. travel), where he is issued a separate expense payment which is not subject to taxation or included in W2 wages?

Yes.