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to the extent such amounts are either paid by the employer or are
attributable to employer contributions that were not includable
in the employee's gross income.6
Section 105(a) coordinates with section 104. As a general
rule, section 105(a) provides that 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 are either paid by the employer or are
attributable to contributions by the employer that were not
included in the employee's gross income.
Section 105(c) sets forth an exception to the general rule
of subsection (a). Thus, section 105(c) provides in relevant
part as follows:
(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 use of a member or function of the body * * *,
and
(2) are computed with reference to the nature
of the injury without regard to the period the
employee is absent from work.
6 See Trappey v. Commissioner, 34 T.C. 407 (1960)
(disability income is received through accident or health
insurance for personal injuries or sickness within the meaning of
sec. 104(a)(3)); see also sec. 105(e)(1) (for purposes of secs.
104 and 105, amounts received under an accident or health plan
for employees are treated as amounts received through accident or
health insurance).
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Last modified: May 25, 2011