Can I Exclude My Employer's Health Insurance from My Income?

Yes — employer-paid health insurance premiums are excluded from your taxable income entirely. If your employer pays $800/month toward your health plan, you never see that as income on your W-2. Premiums you pay through payroll deduction under a Section 125 "cafeteria plan" are also excluded from federal income and payroll taxes. This makes employer health insurance one of the most tax-efficient benefits available to employees. Self-employed individuals can deduct their own health insurance premiums, but the tax treatment is less favorable than the employer exclusion. The exclusion applies to medical, dental, and vision insurance.