Health Insurance Taxable Benefits

Here are the general rules that determine if health insurance benefits received are taxable income:

  • Benefits received by insureds through individual health insurance policies ARE NOT taxable.
  • Benefits received by insureds through group health insurance policies ARE NOT taxable; an exception is when an individual receives a benefit from a group disability income policy: the benefit received that is generated by premium paid by the employer is taxable.
  • Benefits received by businesses through business overhead expense (BOE) disability income insurance ARE taxable.
  • Benefits that businesses receive through disability income insurance related to buy-sell agreements or key person insurance ARE NOT taxable.