The remaining benefits provided by workers' comp are similar to the accident and health benefits
with which life reinsurers are familiar.
106, Employers Accounting for Postretirement Benefits Other Than Pensions, created an incentive for employers to use alternative methods to provide accident and health benefits to retirees.
Also, revenue ruling 69-141 (1969-1 CB 48), states that distributions from a qualified plan to pay an employee-participant's medical expenses are not accident and health benefits excludable under section 105(b), but are taxable under section 402(a) as previously earned deferred compensation.
15 1992, the IRS issued proposed regulations(64) providing that insurance payments received as qualified accelerated death benefits are considered paid by reason of death, and thus are excludible from gross income, and that a life insurance contract may contain accident and health benefits, referred to as "additional benefits," provided the cost of the benefits is accounted for separately.
The products may generally be divided into two types of living benefits-accelerated death benefits and accident and health benefits.
Further, the regulations provide that "certain other additional benefits" (i.e., accident and health benefits) that do not meet the definition of a life insurance contract can be sold in conjunction with a life insurance contract provided certain conditions are satisfied.
Such living benefits, also known as "accelerated death benefits," fall into two categories: mortality benefits, or those associated with premature death (and the medical or living costs of terminally ill individuals), and morbidity benefits, those associated with various forms of disability (for example, accident and health benefits
on the occurrence of specified diseases or conditions requiring long-term nursing care).
Amounts paid to employees for accident and health benefits
are excludible from FICA wages.(35) While Sec.