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Lev
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?

LEV :

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.

Customer:

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.

LEV :

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.

Customer:

Ok. thank you.

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