A plan set up by an employer to reimburse his employees for their medical expenses that are not covered by their regular medical insurance is called a medical expense reimbursement plan. Reimbursable expenses might include dental expenses, expenses in excess of policy limits, etc.
Either reimbursement payments to the employee or insurance premiums paid to an insurance company (under an insured plan) are deductible by the corporation.
Payments are generally received by the employee income-tax free, unless he or she is a "highly compensated employee" and the plan does not meet the nondiscrimination requirements.
Highly Compensated Employees
Uninsured or Insured
This document was last modified on July 26, 1999
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