§106. Contributions by employer to accident and health plans
(a) General rule
Except as otherwise provided in this section, gross income of an employee does not include employer-provided coverage under an accident or health plan.
(b) Contributions to Archer MSAs
(1) In general
In the case of an employee who is an eligible individual, amounts contributed by such employee's employer to any Archer MSA of such employee shall be treated as employer-provided coverage for medical expenses under an accident or health plan to the extent such amounts do not exceed the limitation under section 220(b)(1) (determined without regard to this subsection) which is applicable to such employee for such taxable year.
(2) No constructive receipt
No amount shall be included in the gross income of any employee solely because the employee may choose between the contributions referred to in paragraph (1) and employer contributions to another health plan of the employer.
(3) Special rule for deduction of employer contributions
Any employer contribution to an Archer MSA, if otherwise allowable as a deduction under this chapter, shall be allowed only for the taxable year in which paid.
(4) Employer MSA contributions required to be shown on return
Every individual required to file a return under section 6012 for the taxable year shall include on such return the aggregate amount contributed by employers to the Archer MSAs of such individual or such individual's spouse for such taxable year.
(5) MSA contributions not part of COBRA coverage
Paragraph (1) shall not apply for purposes of section 4980B.
(6) Definitions
For purposes of this subsection, the terms "eligible individual" and "Archer MSA" have the respective meanings given to such terms by section 220.
(7) Cross reference
For penalty on failure by employer to make comparable contributions to the Archer MSAs of comparable employees, see section 4980E.
(c) Inclusion of long-term care benefits provided through flexible spending arrangements
(1) In general
Gross income of an employee shall include employer-provided coverage for qualified long-term care services (as defined in section 7702B(c)) to the extent that such coverage is provided through a flexible spending or similar arrangement.
(2) Flexible spending arrangement
For purposes of this subsection, a flexible spending arrangement is a benefit program which provides employees with coverage under which-
(A) specified incurred expenses may be reimbursed (subject to reimbursement maximums and other reasonable conditions), and
(B) the maximum amount of reimbursement which is reasonably available to a participant for such coverage is less than 500 percent of the value of such coverage.
In the case of an insured plan, the maximum amount reasonably available shall be determined on the basis of the underlying coverage.
(d) Contributions to health savings accounts
(1) In general
In the case of an employee who is an eligible individual (as defined in section 223(c)(1)), amounts contributed by such employee's employer to any health savings account (as defined in section 223(d)) of such employee shall be treated as employer-provided coverage for medical expenses under an accident or health plan to the extent such amounts do not exceed the limitation under section 223(b) (determined without regard to this subsection) which is applicable to such employee for such taxable year.
(2) Special rules
Rules similar to the rules of paragraphs (2), (3), (4), and (5) of subsection (b) shall apply for purposes of this subsection.
(3) Cross reference
For penalty on failure by employer to make comparable contributions to the health savings accounts of comparable employees, see section 4980G.
(e) FSA and HRA terminations to fund HSAs
(1) In general
A plan shall not fail to be treated as a health flexible spending arrangement or health reimbursement arrangement under this section or section 105 merely because such plan provides for a qualified HSA distribution.
(2) Qualified HSA distribution
The term "qualified HSA distribution" means a distribution from a health flexible spending arrangement or health reimbursement arrangement to the extent that such distribution-
(A) does not exceed the lesser of the balance in such arrangement on September 21, 2006, or as of the date of such distribution, and
(B) is contributed by the employer directly to the health savings account of the employee before January 1, 2012.
Such term shall not include more than 1 distribution with respect to any arrangement.
(3) Additional tax for failure to maintain high deductible health plan coverage
(A) In general
If, at any time during the testing period, the employee is not an eligible individual, then the amount of the qualified HSA distribution-
(i) shall be includible in the gross income of the employee for the taxable year in which occurs the first month in the testing period for which such employee is not an eligible individual, and
(ii) the tax imposed by this chapter for such taxable year on the employee shall be increased by 10 percent of the amount which is so includible.
(B) Exception for disability or death
Clauses (i) and (ii) of subparagraph (A) shall not apply if the employee ceases to be an eligible individual by reason of the death of the employee or the employee becoming disabled (within the meaning of section 72(m)(7)).
(4) Definitions and special rules
For purposes of this subsection-
(A) Testing period
The term "testing period" means the period beginning with the month in which the qualified HSA distribution is contributed to the health savings account and ending on the last day of the 12th month following such month.
(B) Eligible individual
The term "eligible individual" has the meaning given such term by section 223(c)(1).
(C) Treatment as rollover contribution
A qualified HSA distribution shall be treated as a rollover contribution described in section 223(f)(5).
(5) Tax treatment relating to distributions
For purposes of this title-
(A) In general
A qualified HSA distribution shall be treated as a payment described in subsection (d).
(B) Comparability excise tax
(i) In general
Except as provided in clause (ii), section 4980G shall not apply to qualified HSA distributions.
(ii) Failure to offer to all employees
In the case of a qualified HSA distribution to any employee, the failure to offer such distribution to any eligible individual covered under a high deductible health plan of the employer shall (notwithstanding section 4980G(d)) be treated for purposes of section 4980G as a failure to meet the requirements of section 4980G(b).
(f) Reimbursements for menstrual care products
For purposes of this section and section 105, expenses incurred for menstrual care products (as defined in section 223(d)(2)(D)) shall be treated as incurred for medical care.
(g) Qualified small employer health reimbursement arrangement
For purposes of this section and section 105, payments or reimbursements from a qualified small employer health reimbursement arrangement (as defined in section 9831(d)) of an individual for medical care (as defined in section 213(d)) shall not be treated as paid or reimbursed under employer-provided coverage for medical expenses under an accident or health plan if for the month in which such medical care is provided the individual does not have minimum essential coverage (within the meaning of section 5000A(f)).
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
COBRA, referred to in the heading for subsec. (b)(5), probably means the Consolidated Omnibus Budget Reconciliation Act of 1985,
Amendments
2020-Subsec. (f).
2016-Subsec. (g).
2014-Subsec. (c)(1).
2010-Subsec. (f).
2006-Subsec. (e).
2003-Subsec. (d).
2000-Subsec. (b).
Subsec. (b)(1).
Subsec. (b)(3).
Subsec. (b)(4).
Subsec. (b)(6).
Subsec. (b)(7).
1996-
Subsec. (c).
1989-Subsec. (b)(2).
1988-
Subsec. (b)(1).
1986-
Subsec. (a).
Subsec. (b)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Effective Date of 2016 Amendment
Amendment by
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2010 Amendment
Effective Date of 2006 Amendment
Effective Date of 2003 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by section 301(c)(1) of
Amendment by section 321(c)(2) of
Effective Date of 1989 Amendment
Effective Date of 1988 Amendment
Amendment by section 1018(t)(7)(A) of
Amendment by section 3011(b)(1) of
Effective Date of 1986 Amendment
Amendment by section 1114(b)(1) of
Amendment by section 1151(j)(2) of
"(1)
"(2)
"(A) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or
"(B) January 1, 1987.
For purposes of subparagraph (A), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by this section shall not be treated as a termination of such collective bargaining agreement."
Regulations
Secretary of the Treasury or his delegate to issue before Feb. 1, 1988, final regulations to carry out amendments made by section 1114 of
Nonenforcement of Amendment Made by Section 1151 of Pub. L. 99–514 for Fiscal Year 1990
No monies appropriated by
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of