---
kind: "range"
citation: "26 C.F.R. §§ 1.105-1–1.105-5"
title: "26"
from: "1.105-1"
to: "1.105-5"
count: 4
url: "https://uscodex.org/cfr/26/1.105-1..1.105-5"
---

# §1.105-1. Amounts attributable to employer contributions.

- (a) **In general.** Under [section 105(a)](/cfr/26/105.md?p=a), amounts received by an employee through accident or health insurance for personal injuries or sickness must be included in his gross income to the extent that such amounts (1) are attributable to contributions of the employer which were not includible in the gross income of the employee, or (2) are paid by the employer, unless such amounts are excluded therefrom under section [105(b)](/cfr/26/105.md?p=b), [(c)](/cfr/26/105.md?p=c), or [(d)](/cfr/26/105.md?p=d). For purposes of this section, the term “amounts received by an employee through an accident or health plan” refers to any amounts received through accident or health insurance, and also to any amounts which, under [section 105(e)](/cfr/26/105.md?p=e), are treated as being so received. See [§ 1.105-5](/cfr/26/1.105-5.md). In determining the extent to which amounts received for personal injuries or sickness by an employee through an accident or health plan are subject to the provisions of [section 105(a)](/cfr/26/105.md?p=a), rather than [section 104(a)(3)](/cfr/26/104.md?p=a-3), the provisions of paragraphs [(b)](#b), [(c)](#c), [(d)](#d), and [(e)](#e) of this section shall apply. A self-employed individual is not an employee for purposes of [section 105](/cfr/26/105.md) and [§§ 1.105-1 through 1.105-5](/cfr/26/1.105-1..1.105-5.md). See [paragraph (g)](/cfr/26/1.72-15.md?p=g) of § 1.72-15. Thus, such an individual will not be treated as an employee with respect to benefits described in [section 105](/cfr/26/105.md) received from a plan in which he participates as an employee within the meaning of [section 401(c)(1)](/cfr/26/401.md?p=c-1) at the time he, his spouse, or any of his dependents becomes entitled to receive such benefits.
- (b) **Noncontributory plans.** All amounts received by employees through an accident or health plan which is financed solely by their employer, either by payment of premiums on an accident or health insurance policy (whether on a group or individual basis), by contributions to a fund which pays accident or health benefits, or by direct payment of the benefits under the plan, are subject to the provisions of [section 105(a)](/cfr/26/105.md?p=a), except to the extent that they are excludable under section [105(b)](/cfr/26/105.md?p=b), [(c)](/cfr/26/105.md?p=c), or [(d)](/cfr/26/105.md?p=d). This rule may be illustrated by the following examples:
- (c) **Contributory plans.**
  - (1) In the case of amounts received by an employee through an accident or health plan which is financed partially by his employer and partially by contributions of the employee, [section 105(a)](/cfr/26/105.md?p=a) applies to the extent that such amounts are attributable to contributions of the employer which were not includible in the employee's gross income. The portion of such amounts which is attributable to such contributions of the employer shall be determined in accordance with [paragraph (d)](#d) of this section in the case of an insured plan, or [paragraph (e)](#e) of this section in the case of a noninsured plan. As used in this section, the phrase “contributions of the employer” means employer contributions which were not includible in the gross income of the employee. See [section 106](/cfr/26/106.md) for the exclusion from an employee's gross income of employer contributions to accident or health plans.
  - (2) A separate determination of the portion of the amounts received under the accident or health plan which is attributable to the contributions of the employer shall be made with respect to each class of employees in any case where the plan provides that some classes of covered employees contribute but others do not, or that the employer will make different contributions for different classes of employees, or that different classes of employees will make different contributions, and where in any such case both the contributions of the employer on account of each such class of employees and the contributions of such class of employees can be ascertained. For example, if employees contribute during the first year of employment but not thereafter, there will have to be a separate determination for first year employees, provided that the amount of the contributions of the employer on account of first-year employees and the contributions of such first-year employees can be ascertained for the required periods to apply the rules of paragraph [(d)](#d) or [(e)](#e) of this section. If in such a case the contributions of the employer to the plan on account of first-year employees are not distinguishable from his other contributions to the plan, then the determination shall be made for all employees under the plan, and such determination shall be used by all employees under the plan.
  - (3) Except as provided in [paragraph (c)(2)](/cfr/26/1.72-15.md?p=c-2) of § 1.72-15, if the plan provides accident or health benefits as well as other benefits for the employees, and if the respective contributions made by the employer and the employees to provide the accident or health benefits cannot be ascertained, the determination of the portion of the accident or health benefits received under such plan which is attributable to the contributions of the employer shall be made in accordance with the rules of paragraph [(d)](#d) or [(e)](#e) of this section on the basis of the contributions of the employer and of the employees to the entire plan.
  - (4) A determination of the portion attributable to the contributions of the employer, once made in accordance with the rules of this section, shall as to such portion be used for all purposes. For example, if an employee receives amounts under a wage continuation plan during the month of January and terminates his services during February, the portion of such amounts which is attributable to the contributions of the employer may be determined in order to provide the employee with such information at the time he is provided his Form W-2. The determination made for such purpose will also be used by the employee to report his income for his taxable year in which such amounts are received, without regard to the experience under the plan for the rest of the year.
- (d) **Insured plans—**
  - (1) **Individual policies.** If an amount is received from an insurance company by an employee under an individual policy of accident or health insurance purchased by contributions of the employer and the employee, the portion of the amount received which is attributable to the employer's contributions shall be an amount which bears the same ratio to the amount received as the portion of the premiums paid by the employer for the current policy year bears to the total premiums paid by the employer and the employee for that year. This rule may be illustrated by the following example:
  - (2) **Group policies.** If the accident or health coverage is provided under or is a part of a group insurance policy purchased by contributions of the employer and of the employees, and the net premiums for such coverage for a period of at least three policy years are known at the beginning of the calendar year, the portion of any amount received by an employee which is attributable to the contributions of the employer for such coverage shall be an amount which bears the same ratio to the amount received as the portion of the net premiums contributed by the employer for the last three policy years which are known at the beginning of the calendar year, bears to the total of the net premiums contributed by the employer and all employees for such policy years. If the net premiums for such coverage for a period of at least three policy years are not known at the beginning of the calendar year but are known for at least one policy year, such determination shall be made by using the net premiums for such coverage which are known at the beginning of the calendar year. If the net premiums for such coverage are not known at the beginning of the calendar year for even one policy year, such determination shall be made by using either (i) a reasonable estimate of the net premiums for the first policy year, or (ii) if the net premiums for a policy year are ascertained during the calendar year, by using such net premiums. These rules may be illustrated by the following example:
- (e) **Noninsured plans.** If the accident or health benefits are a part of a noninsured plan to which the employer and the employees contribute, and such plan has been in effect for at least three years before the beginning of the calendar year, the portion of the amount received which is attributable to the employer's contributions shall be an amount which bears the same ratio to the amount received as the contributions of the employer for the period of three calendar years next preceding the year of receipt bear to the total contributions of the employer and all the employees for such period. If, at the beginning of the calendar year of receipt, such plan has not been in effect for three years but has been in effect for at least one year, such determination shall be based upon the contributions made during the 1-year or 2-year period during which the plan has been in effect. If such plan has not been in effect for one full year at the beginning of the calendar year of receipt, such determination may be based upon the portion of the year of receipt preceding the time when the determination is made, or such determination may be made periodically (such as monthly or quarterly) and used throughout the succeeding period. For example, if an employee terminates his services on April 15, 1955, and 1955 is the first year the plan has been in effect, such determination may be based upon the contributions of the employer and the employees during the period beginning with January 1 and ending with April 15, or during the month of March, or during the quarter consisting of January, February, and March.

# §1.105-2. Amounts expended for medical care.


[Section 105(b)](/cfr/26/105.md?p=b) provides an exclusion from gross income with respect to the amounts referred to in [section 105(a)](/cfr/26/105.md?p=a) (see [§ 1.105-1](/cfr/26/1.105-1.md)) which are paid, directly or indirectly, to the taxpayer to reimburse him for expenses incurred for the medical care (as defined in [section 213(e)](/cfr/26/213.md?p=e)) of the taxpayer, his spouse, and his dependents (as defined in [section 152](/cfr/26/152.md)). However, the exclusion does not apply to amounts which are attributable to (and not in excess of) deductions allowed under [section 213](/cfr/26/213.md) (relating to medical, etc., expenses) for any prior taxable year. See [section 213](/cfr/26/213.md) and the regulations thereunder. [Section 105(b)](/cfr/26/105.md?p=b) applies only to amounts which are paid specifically to reimburse the taxpayer for expenses incurred by him for the prescribed medical care. Thus, [section 105(b)](/cfr/26/105.md?p=b) does not apply to amounts which the taxpayer would be entitled to receive irrespective of whether or not he incurs expenses for medical care. For example, if under a wage continuation plan the taxpayer is entitled to regular wages during a period of absence from work due to sickness or injury, amounts received under such plan are not excludable from his gross income under [section 105(b)](/cfr/26/105.md?p=b) even though the taxpayer may have incurred medical expenses during the period of illness. Such amounts may, however, be excludable from his gross income under [section 105(d)](/cfr/26/105.md?p=d). See [§ 1.105-4](/cfr/26/1.105-4.md). If the amounts are paid to the taxpayer solely to reimburse him for expenses which he incurred for the prescribed medical care, [section 105(b)](/cfr/26/105.md?p=b) is applicable even though such amounts are paid without proof of the amount of the actual expenses incurred by the taxpayer, but [section 105(b)](/cfr/26/105.md?p=b) is not applicable to the extent that such amounts exceed the amount of the actual expenses for such medical care. If the taxpayer incurs an obligation for medical care, payment to the obligee in discharge of such obligation shall constitute indirect payment to the taxpayer as reimbursement for medical care. Similarly, payment to or on behalf of the taxpayer's spouse or dependents shall constitute indirect payment to the taxpayer.


# §1.105-3. Payments unrelated to absence from work.


[Section 105(c)](/cfr/26/105.md?p=c) provides an exclusion from gross income with respect to the amounts referred to in [section 105(a)](/cfr/26/105.md?p=a) to the extent that such amounts (a) constitute payments for the permanent loss or permanent loss of use of a member or function of the body, or the permanent disfigurement, of the taxpayer, his spouse, or a dependent (as defined in [section 152](/cfr/26/152.md)), and (b) are computed with reference to the nature of the injury without regard to the period the employee is absent from work. Loss of use or disfigurement shall be considered permanent when it may reasonably be expected to continue for the life of the individual. For purposes of [section 105(c)](/cfr/26/105.md?p=c), loss or loss of use of a member or function of the body includes the loss or loss of use of an appendage of the body, the loss of an eye, the loss of substantially all of the vision of an eye, and the loss of substantially all of the hearing in one or both ears. The term “disfigurement” shall be given a reasonable interpretation in the light of all the particular facts and circumstances. [Section 105(c)](/cfr/26/105.md?p=c) does not apply if the amount of the benefits is determined by reference to the period the employee is absent from work. For example, if an employee is absent from work as a result of the loss of an arm, and under the accident and health plan established by his employer, he is to receive $125 a week so long as he is absent from work for a period not in excess of 52 weeks, [section 105(c)](/cfr/26/105.md?p=c) is not applicable to such payments. See, however, [section 105(d)](/cfr/26/105.md?p=d) and [§ 1.105-4](/cfr/26/1.105-4.md). However, for purposes of [section 105(c)](/cfr/26/105.md?p=c), it is immaterial whether an amount is paid in a lump sum or in installments. [Section 105(c)](/cfr/26/105.md?p=c) does not apply to amounts which are treated as workmen's compensation under [paragraph (b)](/cfr/26/1.104-1.md?p=b) of § 1.104-1, or to amounts paid by reason of the death of the employee (see [section 101](/cfr/26/101.md)).


# §1.105-5. Accident and health plans.

- (a) **In general.** Sections [104(a)(3)](/cfr/26/104.md?p=a-3) and [105 (b)](/cfr/26/105.md?p=b), [(c)](/cfr/26/105.md?p=c), and [(d)](/cfr/26/105.md?p=d) exclude from gross income certain amounts received through accident or health insurance. [Section 105(e)](/cfr/26/105.md?p=e) provides that for purposes of sections [104](/cfr/26/104.md) and [105](/cfr/26/105.md) amounts received through an accident or health plan for employees, and amounts received from a sickness and disability fund for employees maintained under the law of a State, a Territory, or the District of Columbia, shall be treated as amounts received through accident or health insurance. In general, an accident or health plan is an arrangement for the payment of amounts to employees in the event of personal injuries or sickness. A plan may cover one or more employees, and there may be different plans for different employees or classes of employees. An accident or health plan may be either insured or noninsured, and it is not necessary that the plan be in writing or that the employee's rights to benefits under the plan be enforceable. However, if the employee's rights are not enforceable, an amount will be deemed to be received under a plan only if, on the date the employee became sick or injured, the employee was covered by a plan (or a program, policy, or custom having the effect of a plan) providing for the payment of amounts to the employee in the event of personal injuries or sickness, and notice or knowledge of such plan was reasonably available to the employee. It is immaterial who makes payment of the benefits provided by the plan. For example, payment may be made by the employer, a welfare fund, a State sickness or disability benefits fund, an association of employers or employees, or by an insurance company.
- (b) **Self-employed individuals.** Under [section 105(g)](/cfr/26/105.md?p=g), a self-employed individual is not treated as an employee for purposes of [section 105](/cfr/26/105.md). Therefore, for example, benefits paid under an accident or health plan as referred to in [section 105(e)](/cfr/26/105.md?p=e) to or on behalf of an individual who is self-employed in the business with respect to which the plan is established will not be treated as received through accident and health insurance for purposes of sections [104(a)(3)](/cfr/26/104.md?p=a-3) and [105](/cfr/26/105.md).