Court of Appeals precludes General Signal from deducting amounts used to pre-fund medical and life insurance benefits

Article Abstract:

The US 2d Circuit Court of Appeals in General Signal Corp. v. Commissioner agreed with the IRS that its regulations restricting employers' deductions of costs of prefunding post-retirement medical and life insurance benefits are valid. General Signal had claimed deductions for voluntary employee benefit association contributions with 72% deducted under IRC section 419A(c)(2). The court found the requirements of that section were not met as the requisite intent was lacking.

Usage, Voluntary employees' beneficiary associations

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Value of medical discount cards that are part of employer-sponsored health plan is excludible from employee's income but not deductible by the partners of the employer as a medical expense

Article Abstract:

The IRS ruled in Letter Ruling 9814023 that the costs of medical discount cards issued to employees was not deductible by the issuing employer-partnership or includible in the employees' incomes. The cost of the fringe benefit and individual discounts are the result of a negotiated reduction in prices of medical services and so are not income. The right to receive lower prices does not constitute deductible accident or health insurance.

Employee Health Benefits, Health insurance

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IRS rules that "paid up" life insurance benefits may be provided through a VEBA

Article Abstract:

The focus of this article is IRS Private Letter Ruling 19993040 where the IRS determined that the IRC section 501(c)(9) tax exemption for certain VEBA (voluntary employees' beneficiary association) payments was allowable for payments of paid-up life insurance under the specific factual circumstances of the ruling.

United States, Tax Law, Life insurance, Tax exemption, Tax exemptions

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