Medical costs from the self-insured plan

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Reference no: EM13972844

Abe is an employee of Haddock, Inc. Haddock provides basic health and accident insurance to all its employees through a contract with Minor Accident Insurance Company. Because the Minor policy does not cover 100% of medical costs, Haddock provides all executive officers with a self-insured plan to pay any medical costs not covered by Minor's policy. Abe is eligible for both plans. During the current year, pre- miums on the Minor policy for Abe were $1,450. Abe is reimbursed for $1,900 of his medical costs from the self-insured plan.

a. What are the tax consequences to Abe of the payments made by Haddock?

b. What difference would it make if all employees were covered under both plans?

Reference no: EM13972844

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