IRS determines treatment of fixed indemnity health plan payments

In Chief Counsel Advice, the IRS concluded that an employer can’t exclude from an employee’s gross income payments under an employer-provided fixed indemnity health plan if the coverage value was excluded from the employee’s gross income. Also, an employer can’t exclude from an employee’s gross income payments under an employer-provided fixed indemnity health plan if the premiums for the fixed indemnity health plan were originally made by salary reduction through a cafeteria plan. (CCA 201703013)