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What types of health insurance premiums are eligible for reimbursement?

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This article is for Participants whose Zane Plan allows reimbursement of health insurance premiums.

Your Zane Plan can reimburse the following types of health-related insurance premiums, provided (1) the policy is in your name, or in the name of a listed dependent on your Zane Plan, (2) the policy was not already paid for with pre-tax dollars, and (3) your Zane Plan reimburses health insurance premiums.
  • Major medical individual health insurance premiums
  • Limited benefit individual health insurance premiums
  • Dental care premiums
  • Vision care premiums
  • Qualified health-related ancillary premiums
  • Medicare part A or B, Medicare HMO, and employer-sponsored health insurance premiums
  • Medicare Advantage and supplement premiums (e.g. prescription policies)
  • Long term care insurance premiums
  • COBRA premiums
  • Short-Term Medical policies
Health insurance policy premiums that are not reimbursable through your Zane Plan are:
  • Life insurance policies
  • Policies for loss of life, limb, sight, etc.
  • Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury
  • Policies providing payment for loss of earnings ("income replacement"), such as critical illness and disability policies
    • Why not? Critical illness, disability insurance, and accident insurance plans provide a lump sum benefit when a critical illness, disability, or accident occurs. Therefore, the insurance benefit does not pay directly for medical expenses directly related to the medical condition (ex. funds received from the policy could be used to pay for other expenses like transportation and food). IRS Publication 502 states that includable medical expenses must cover and pay for medical care directly (i.e. hospitalization, surgical services, prescription drugs, etc.). Since there is no definitive method to insure that critical illness or disability funds are being used for direct medical expenses, the IRS does not allow them to be reimbursed tax-free through your Zane Plan.
  • Health care ministry sharing programs ("Medi-Share" or medical share plans)
    • Why not? Health care ministry sharing plans are not insurance, rather they are medical care sharing programs in which a group of people share financial resources to help pay for each other’s medical expenses. In general, health care ministry sharing programs require a monthly donation from its members, and when a medical expense occurs the members are allowed to file a claim for reimbursement. IRS Section 213 indicates what types of expenses are reimbursable through medical reimbursement plans, including your Zane Plan. As specified in IRS Section 213(d), an expense can be reimbursed if the benefit is offered by an insurance company or the benefit is part of the insurance itself. A health care ministry sharing program does not fall into either category in IRS Section 213(d), so these types of expenses are not reimbursable through your Zane Plan.
If you are seeking reimbursement for premiums paid tax-free through a spouse’s plan, you can contact your spouse’s HR department to request the premiums are taken out on payroll post-tax. Then, you can resubmit your claim with your documentation showing a post-tax payment for the premiums. 

For a complete listing, see IRS Publication 502.

PLEASE NOTE: The type of health insurance employees obtain (ex: individual health insurance, spousal coverage, coverage under parents' policy, etc.) and whether or not an employee currently has health insurance does NOT determine participation eligibility. Eligibility to participate is structured using employee classifications (classes) that are based on 1) bona-fide job criteria (job titles, full-time/part-time status, etc.) and 2) waiting periods for new hires set by your company. See: Employee Eligibility for Defined Contribution Health Plans

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Disclaimer: The information provided on this website is general in nature and does not apply to any specific U.S. state except where noted. Health insurance regulations differ in each state. See a licensed agent for detailed information on your state. Zane Benefits, Inc. does not sell health insurance. None of this information should be taken as legal or tax advice.