Apparently, the rumor mills are at it again. I’ve received three emails already this morning to this effect:
I’ve been told by several friends that my employer provided health care benefits will be subject to regular income tax treatment in 2011. I pay a monthly amount that partially pays for a high-deductible Blue Cross policy. Will there be different tax treatment in 2011 over 2010?
This is not true. I’ve written about this before (you can read the entire post here) but let me sum it up for you:
For the tax year 2011, employers must report health care benefits for employees. It will appear on your W-2 in 2012 as a report. It will not affect your taxable income.
Under the new health care plan, there is a penalty for those taxpayers who are not covered by health insurance. The reporting requirement will eventually assist the IRS in verifying that taxpayers have coverage. Additionally, the so-called Cadillac tax on high-dollar insurance plans goes into effect in 2018. The new reporting requirement will allow the IRS to identify taxpayers who are covered under these plans.
But to reconfirm: You will not pay tax on the amount of employer-related health care benefits reported in 2011 (some exceptions, such as HRA distributions which are not for reimbursed expenses apply just as they always have).