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cannot accept petitioner’s argument that, in reality, the
contributions were made by U.S. Airways employees, including
petitioner, via the wage concessions. To accept petitioner’s
position would essentially qualify any negotiated disability
package for exclusion under section 104(a)(3) since any such
package could be construed as a substitute for wages that
employees might otherwise receive. We cannot agree that Congress
intended section 104(a)(3) to be read so broadly as to exclude
accident or health insurance benefits attributable to wage
concessions made in a negotiated bargaining process.
Although section 104(a)(3) is not explicit on the subject,
it clearly contemplates that exemption of benefits depends on
whether contributions to an accident and health insurance plan
involve after-tax dollars. Indeed, if an employee is to exclude
disability benefits attributable to employer contributions, those
contributions must have been includable in the employee’s gross
income. Sec. 104(a)(3). Petitioner asks this Court to accept
that wage concessions, which reduced the wages he might have
otherwise received, but which were not taxed, represent
contributions that he made to an accident or health insurance
plan for purposes of section 104(a)(3). This would be contrary
to the underlying intent that Congress had in enacting that Code
section and the limitations that it imposed on exclusion therein.
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Last modified: May 25, 2011