Normally income reported on a 1099-NEC is taxable, but health insurance provided to an employee is not taxable. Since the payments didn't go directly to the insurance company as part of the company group insurance plan, technically they are probably taxable to you. Your only recourse would be to enter the Form 1099-NEC and then enter a negative adjustment to income to reverse the affect of the entry. Then, include a disclosure statement on Form 8275 to explain what you did. The IRS may allow the exemption from income based on the unique circumstances. Here is a link to Form 8275, it is not available in TurboTax though: Form 8275
You can make that adjusting entry in TurboTax as follows:
1. From the Federal menu in TurboTax find Wages and Income
2. Find Less Common Income
3. Choose Miscellaneous Income, 1099-A, 1099-C
4. Choose Other Reportable Income
5. Enter a description and the adjustment as a negative number
Also, the income should have been reported on your W-2 form and not the 1099-NEC, so you may be able to get your employer to void the 1099-NEC form, but most companies don't want to do that.
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