That statement is for accident or health insurance exclusion. Your regular sick pay that you can take at your discretion is still considered taxable income.
An employee of Company X is allowed 12 vacation days and 15 sick days for the calendar year. The employee uses 12 vacation days and 10 sick days in the calendar year for which he or she receives his or her regular wage payment, regardless of the cause for his or her absence. The amounts received by the employee in the calendar year for the 12 vacation days and 10 sick days are subject to tax as wage and salary income to the employee and the employer must also withhold Gross Income Tax on such payments. Form 2440
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