TAXATION - FEDERAL INCOME TAX-WHAT CONSTITUTES ACCIDENT OR HEALTH INSURANCE UNDER SECTION 22(b)(5)-

Authors

Marvin O. Young, University of Michigan Law SchoolFollow

Abstract

Plaintiff brought this action to recover federal income tax paid by him for the year 1945 on a sum of $1800 which plaintiff received from his employer pursuant to a "free" sickness benefits plan which plaintiff's employer had in effect, claiming that this amount was excludable from gross income under section 22(b)(5) as "amounts received through accident or health insurance." Plaintiff's employer was an insurance company with authority to write health and accident insurance, and "free" protection was given to all full-time salaried home and branch office employees who could pass a satisfactory medical examination. Many ordinary features of a typical health insurance policy were present except that no premium was paid by the employee. The district court held that the employer was under no contractual liability to pay these benefits because of the lack of consideration for the employer's promise, and that therefore there was no "insurance." On appeal, held, reversed, there is adequate consideration present in the agreement of employment, creating a valid and enforceable "insurance" contract and making the payments to the plaintiff pursuant thereto excludable from gross income under section 22(b)(5). Epmeier v. United States, (7th Cir. 1952) 199 F. (2d) 508.

Recommended Citation

Marvin O. Young, TAXATION - FEDERAL INCOME TAX-WHAT CONSTITUTES ACCIDENT OR HEALTH INSURANCE UNDER SECTION 22(b)(5)-, 51 Mich. L. Rev. 1248 (1953).
Available at: https://repository.law.umich.edu/mlr/vol51/iss8/15