Practice Quiz

Health and Life Insurance

Category - Tax Issues

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Are the benefits received from a health insurance policy taxable?
  1. Yes, if the premium was paid with pre-tax dollars
  2. Yes, if the premium was paid with after-tax dollars
  3. No, regardless of how the premiums were paid
  4. None of the above
Explanation
Answer: C - Regardless of who pays the health insurance premium, health insurance benefits are not taxable. This also holds true whether the premiums are paid with pre-tax or after-tax dollars. Likewise, the benefits that are received from long-term care insurance policies are also not considered to be taxable income to the insured.
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