Question

How are employer contributions to accident and health and group legal services plans treated by employees on their own income tax returns?

Answer 1

Treatment Under Employment Taxes:
Type of Fringe Benefit	Income Tax Withholding	Social Security and Medicare	Federal Unemployment (FUTA)
		(including Additional Medicare
		Tax when wages are paid in
		excess of $200,000)1
Accident and health benefits	Exempt,2	Exempt, except for certain	Exempt
	except for long-term care	payments to S corporation
	benefits provided through a flexible	employees who are 2%
	spending or similar arrangement.	shareholders.
Note:
1 Or other railroad retirement taxes, if applicable.
2 Exemption doesn't apply to S corporation employees who are 2% shareholders.

Exemption doesn't apply to services for tax preparation, accounting, legal, or brokerage services.