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I cancelled my employer provided health insurance, but they charged me and will reimburse me. Is that refund taxable?

I pay for health insurance through my employer and it's deducted from the first paycheck of the month. My wife recently added me onto her new policy through her work and I tried to cancel before the billing cycle, but wasn't able to in time. My next paycheck has the deduction for my health insurance and I've been told I'll be reimbursed, but it will be subject to applicable taxes. Is this true?

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2 Replies
rjs
Level 15
Level 15

I cancelled my employer provided health insurance, but they charged me and will reimburse me. Is that refund taxable?

That sounds right. The premiums for employer-provided health insurance are usually deducted from your pay tax-free. So it was not included in your taxable income on the paycheck it was deducted from. When they pay it back to you, it becomes additional ordinary pay, and is subject to tax the same as the rest of your pay.

I cancelled my employer provided health insurance, but they charged me and will reimburse me. Is that refund taxable?

The amount will be included in your taxable wages on the W2 at the end of the year.  The deduction was taken from your wages pre tax so the refund of the premium will automatically be added back to your taxable income. 

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