Have a Tax Question? Ask a Tax Expert
Instructions for Form 1099-MISC box 6 (Medical and Health Care Payments)Enter payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services. (Include payments made by medical and health care insurers under health, accident, and sickness insurance programs.)I would like an explanation of the part in parenthesis. Does this mean that the business for whom I am filing 1099s should file a 1099 for health insurance payments paid out by the insurance company on behalf of our employees or business partners (This company is a partnership)?
Welcome to JustAnswer!Form 1099-MISC box 6 (Medical and Health Care Payments) is made like institutions (like insurance companies) to report payments to medical facilities (doctors, health care providers, etc.). Do not use this box to report health insurance premiums paid to the insurance company. Payments to employees injury or sickness through an accident or health plan - if premiums were paid by an employer or by employees on pre-tax basis - are reported on W-2 form as wages. Payments to partners are included into K-1.
Customer: The company offers an insurance plan to all employees and partners. The company also pays the deductible, so we do make payments directly to medical health care providers on behalf of employees in the event that they should make use of the policy. How would this be handled?
LEV: "We do make payments directly to medical health care providers" - are you paying to insurance companies or to hospitals and doctors?
Customer: The payments quoted are to hospitals and doctors. How I understood it was that payments to hospitals and doctors should be reported where as insurance premiums to insurance companies were exempt. However, the wording of the IRS instructions created some confusion on my part.
LEV: May you confirm - to whom payments are made - to insurance companies OR to hospitals and doctors?
Customer: I'm sorry if it wasn't clear: we do make payments directly to medical health care providers refers to the deductible payments, we make directly to hospitals and doctors.
LEV: You may not deduct payments made directly to medical health care providers on behalf of employees and partners - these should be included into wages (W-2 box 1) or distributions (K-1) and employees and partners will deduct medical expenses on their tax returns.
Customer: Okay, to recap the information. You are informing me that since these payments are reported either on a W-2 to the employees or on a K-1 to the partners, we do not need to file a 1099 medical payments. Have I understood you correctly?
LEV: That is correct.
Customer: Thanks for your help.
LEV: You are welcome.