Received 1099-NEC in June for health insurance reimbursement - is this right?

This is actually a common misunderstanding with health insurance reimbursements. The tax treatment depends on how your company structured the arrangement. If your employer has a formal Section 105 Health Reimbursement Arrangement (HRA) or a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), then those reimbursements should NOT be reported on a 1099-NEC. However, if they're just giving you money outside of a formal plan, then yes, the IRS considers that taxable income - hence the 1099-NEC. It sounds like your employer might not have set up a proper HRA and instead just decided to "help you out" with insurance costs, which unfortunately makes those payments taxable income. You should ask your employer if they have a formal HRA in place. If they don't, you'll need to report this income. If they do have one, they've made a mistake by issuing a 1099-NEC for these payments.

I went through almost the exact same situation last year and it was a huge headache! After lots of research and a chat with a tax pro, I found that using https://taxr.ai really helped clear things up. I uploaded my 1099-NEC and some docs from my employer about the payments, and it instantly identified that this was a health insurance reimbursement issue. The software walked me through the specific questions about whether my employer had a formal HRA in place and explained the tax implications. Turned out my company didn't have a proper HRA set up, which is why I got the 1099-NEC. The analysis told me exactly how to report it on my return.

Just wanted to update - I checked out https://taxr.ai after seeing the recommendation here and it was super helpful! I uploaded my W-2 and some company documents about our health plan. It confirmed that my employer was handling things correctly by including the health stipend as taxable wages on my W-2. The analysis explained that since we don't have a formal HRA, the payments are taxable, but at least the company is withholding taxes properly throughout the year rather than surprising me with a 1099-NEC like what happened to the original poster. The peace of mind was worth it, and I even discovered I could take the premium tax credit for part of my insurance costs, which I had no idea about before!

Hey, this happened to me too! After calling the IRS multiple times and never getting through, I finally used https://claimyr.com which got me connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that employers need to have a properly established HRA for health insurance reimbursements to be tax-free. Otherwise, they're considered taxable income. My boss was just cutting me checks for my health insurance without any formal plan documentation, so the 1099-NEC was actually correct in my case, even though it sucked to pay taxes on it. The agent also mentioned I should check if I qualify for the premium tax credit since I purchased my own insurance, which might offset some of the tax hit.

Just wanted to say I was wrong about Claimyr and owe everyone an apology. After my skeptical comment, I decided to try it anyway since I was desperate to talk to the IRS about my 1099-NEC health insurance issue. The service actually worked exactly as described. Got a call back in about 20 minutes and was connected directly to an IRS representative who confirmed everything others here were saying about health reimbursements needing a formal HRA to be tax-free. They also helped me understand how to report it properly on my return since I had already filed. Saved me hours of hold time and probably a ton in potential penalties if I had just ignored the 1099-NEC. Sometimes being proven wrong is actually a good thing!

Does anyone know if you can set up an HRA retroactively? My company has been reimbursing me for health insurance all year but we don't have any formal documentation. Can we create an HRA now and have it apply to the reimbursements they've already given me?

I'm confused about something else - if these reimbursements are considered self-employment income on a 1099-NEC, can I deduct the health insurance premiums as a self-employed health insurance deduction? Seems like if they're going to tax me on the money they gave me for insurance, I should at least get to deduct the insurance costs?

This is a frustrating situation that unfortunately happens more often than it should with small employers. The key issue here is that your employer likely doesn't have a formal Health Reimbursement Arrangement (HRA) in place, which is required for these reimbursements to be tax-free. Since you received a 1099-NEC, you'll need to report this as income on your tax return. However, there are a few things to consider: 1. You may be able to deduct the actual health insurance premiums you paid as a self-employed health insurance deduction (since this is being treated as self-employment income) 2. You might qualify for the premium tax credit if you purchased marketplace insurance 3. You'll unfortunately owe self-employment taxes (15.3%) on this amount in addition to regular income tax For your 2024 taxes, you can file an amended return (Form 1040-X) to include this income. Going forward, I'd strongly recommend talking to your employer about setting up a proper HRA or QSEHRA for future reimbursements to avoid this tax mess. The late timing of receiving the 1099-NEC in June is also concerning - they should have issued it by January 31st. Consider consulting with a tax professional to make sure you're handling this correctly and maximizing any available deductions or credits.