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Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I have just retired as an employee with NYS and am continuing

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I have just retired as an employee with NYS and am continuing my health insurance in retiree status. I retain the same coverage and pay only the employee rate that I did before which is approximately $350 per month. I was able to apply 6 months of unused sick leave, however, as a credit against future premiums in the approximate amount of $330. With that credit, I only have to pay $20 per month.

My question is whether this credit is considered taxable income to me. I spoke to someone at NYS Civil Service who said that NYS does not issue a W-2 for the credit and does not consider it income for purposes of NYS tax. What about federal income tax?


Hi and welcome to Just Answer!
Payments made by the employer for medical insurance is not included into taxable income.
That is also correct for former employees.
So far - regardless how your employer determined the amount paid for your medical insurance - with f unused sick leave or from any other funds - that is NOT your taxable income and should not be reported to the IRS.


I know the employer contribution is not considered taxable income, but this seemed different in that my former employer NYS was giving me money in the form of a credit to pay my share. If I understand you correctly, you say this makes no difference.


Based on your information - your former employer does NOT give you the money, but directly applies credits to pay your share.
If your employer provides a payment to you - that would be your taxable income.
However if you are due wages and such wages are used to pay health insurance premiums - that is done on pre-tax basis - and not reported as taxable income.


Ok. thank you.

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