insurance refund of premium paid

[stone11706]

i fully retired at the end of 2016.  my old employer received a refund of insurance premiums where the insurance company overcharged.  these overcharges were during my time of employment so I received a portion of this refund.  I received a company check for the refund due to me in november of 2019.  My old employer reported this refund in the form of a W-2 for the year 2019.  Obviously, i was not an employee in 2019.  Is a W-2 the correct way for my employer to report this income/refund to the IRS?

[JulieS · Accepted solution]

Yes, it is. The reason why is that your health insurance premiums reduce your taxable income during the year that you were still working. If you still worked there in 2019, they would have adjusted your wages for 2019 to show the amount that should have been taxed in the first place.  

So, from the company's point of view, they took a deduction on behalf of their insured employees in 2018. In 2019, the insurance company refunded part of the premiums. The refund is distributed to the employees and increases their wages in the year it is received.