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[1] So in original. Probably should be followed by a closing parenthesis.
§ 105. Amounts received under accident and health plans
(a)
Amounts attributable to employer contributions
Except as otherwise provided in this section, amounts received by an employee through accident or health insurance for personal injuries or sickness shall be included in gross income to the extent such amounts
(1)
are attributable to contributions by the employer which were not includible in the gross income of the employee, or
(b)
Amounts expended for medical care
Except in the case of amounts attributable to (and not in excess of) deductions allowed under section
213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include amounts referred to in subsection (a) if such amounts are paid, directly or indirectly, to the taxpayer to reimburse the taxpayer for expenses incurred by him for the medical care (as defined in section 213(d)) of the taxpayer, his spouse, and his dependents (as defined in section
152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof). Any child to whom section
152
(e) applies shall be treated as a dependent of both parents for purposes of this subsection.
(c)
Payments unrelated to absence from work
Gross income does not include amounts referred to in subsection (a) to the extent such amounts—
(1)
constitute payment for the permanent loss or loss of use of a member or function of the body, or the permanent disfigurement, of the taxpayer, his spouse, or a dependent (as defined in section
152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), and
(e)
Accident and health plans
For purposes of this section and section
104—
(2)
amounts received from a sickness and disability fund for employees maintained under the law of a State or the District of Columbia,
shall be treated as amounts received through accident or health insurance.
(h)
Amount paid to highly compensated individuals under a discriminatory self-insured medical expense reimbursement plan
(1)
In general
In the case of amounts paid to a highly compensated individual under a self-insured medical reimbursement plan which does not satisfy the requirements of paragraph (2) for a plan year, subsection (b) shall not apply to such amounts to the extent they constitute an excess reimbursement of such highly compensated individual.
(2)
Prohibition of discrimination
A self-insured medical reimbursement plan satisfies the requirements of this paragraph only if—
(3)
Nondiscriminatory eligibility classifications
(A)
In general
A self-insured medical reimbursement plan does not satisfy the requirements of subparagraph (A) of paragraph (2) unless such plan benefits—
(B)
Exclusion of certain employees
For purposes of subparagraph (A), there may be excluded from consideration—
(iv)
employees not included in the plan who are included in a unit of employees covered by an agreement between employee representatives and one or more employers which the Secretary finds to be a collective bargaining agreement, if accident and health benefits were the subject of good faith bargaining between such employee representatives and such employer or employers; and
(4)
Nondiscriminatory benefits
A self-insured medical reimbursement plan does not meet the requirements of subparagraph (B) of paragraph (2) unless all benefits provided for participants who are highly compensated individuals are provided for all other participants.
(5)
Highly compensated individual defined
For purposes of this subsection, the term “highly compensated individual” means an individual who is—
(B)
a shareholder who owns (with the application of section
318) more than 10 percent in value of the stock of the employer, or
(6)
Self-insured medical reimbursement plan
The term “self-insured medical reimbursement plan” means a plan of an employer to reimburse employees for expenses referred to in subsection (b) for which reimbursement is not provided under a policy of accident and health insurance.
(7)
Excess reimbursement of highly compensated individual
For purposes of this section, the excess reimbursement of a highly compensated individual which is attributable to a self-insured medical reimbursement plan is—
(A)
in the case of a benefit available to highly compensated individuals but not to all other participants (or which otherwise fails to satisfy the requirements of paragraph (2)(B)), the amount reimbursed under the plan to the employee with respect to such benefit, and
(B)
in the case of benefits (other than benefits described in subparagraph (A) [1] paid to a highly compensated individual by a plan which fails to satisfy the requirements of paragraph (2), the total amount reimbursed to the highly compensated individual for the plan year multiplied by a fraction—
(i)
the numerator of which is the total amount reimbursed to all participants who are highly compensated individuals under the plan for the plan year, and
(ii)
the denominator of which is the total amount reimbursed to all employees under the plan for such plan year.
In determining the fraction under subparagraph (B), there shall not be taken into account any reimbursement which is attributable to a benefit described in subparagraph (A).
(8)
Certain controlled groups, etc.
All employees who are treated as employed by a single employer under subsection (b), (c), or (m) of section
414 shall be treated as employed by a single employer for purposes of this section.
(i)
Sick pay under Railroad Unemployment Insurance Act
Notwithstanding any other provision of law, gross income includes benefits paid under section 2(a) of the Railroad Unemployment Insurance Act for days of sickness; except to the extent such sickness (as determined in accordance with standards prescribed by the Railroad Retirement Board) is the result of on-the-job injury.
[1] So in original. Probably should be followed by a closing parenthesis.
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