Can someone help me out with the tax issues related to post retirement health benefits. After an employee retires and begins receiving the benefits, do we report them to the IRS? On a 1099 or what? Are they taxable in any/all circumstances? Is there a difference in taxation/reporting if we keep retirees on a medical plan and pay the premium, versus reimbursing employees for their own medical premiums. If the benefits are taxable, are there ways to get around the taxation? Our post retirement health benefit amount that is paid by the City is based on years of service (4% per year). We are analyzing the pros and cons of converting to PEMHCA through PERS. We understand we would have to pay the same amount for current employees and retirees. We understand that we could set that amount at the minimum $16 per month, and then compensate people for the difference, possibly in the form of a "stipend" for retirees, and through a cafeteria plan for employees. Is anyone doing something similar. What are the IRS considerations?
