Over the Wire: Spring 2019

Valuable Income Taxation Features of your Health and Welfare Plan

As Plan Members, are you aware of the valuable tax free features of your benefit Plan? Such features include: 

Tax Free Benefits:

• Contributions made to the Plan on your behalf by Employers are considered non-taxable benefits;
• Life Insurance payments made to Beneficiaries/Estates upon your passing;
• Premiums paid for benefits such as Accidental Dismemberment, Weekly Disability, Long Term Disability, Vision, Dental, and Prescription Drugs;
• Payments of claims for Accidental Dismemberment, Vision, Dental, and Prescription Drugs benefits.

Taxable Items:

• Premiums paid by the Plan for you and your Dependent’s Life Insurance and the Plan Member’s Accidental Death benefit are added to your taxable income. However, because life insurance is provided on a group basis, you don’t need to go through a medical exam to determine whether or not you are eligible for coverage (100% insurability);
• Weekly Disability and Long-Term Disability, when receiving these benefits. Disability benefits are designed to replace a portion of your income when you are disabled.

Therefore, by using the Health and Welfare Plan to pay for the various benefits provided, the special income tax provisions associated with the Plan saves the Plan Member considerable income tax that otherwise would have been paid if the Plan Member received a higher income and used after tax money to pay for their benefits.

Using our current full benefit monthly costs of $345.00 per Plan Member, only $50.08 (the Life Insurance and Accidental Death premiums) would be added to your taxable income! The balance of $294.92 represents the value of the benefits that are provided to a Plan Member on a tax free basis.

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