[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.105-5]

[Page 459]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.105-5  Accident and health plans.

    (a) In general. Sections 104(a)(3) and 105 (b), (c), and (d) exclude 
from gross income certain amounts received through accident or health 
insurance. Section 105(e) provides that for purposes of sections 104 and 
105 amounts received through an accident or health plan for employees, 
and amounts received from a sickness and disability fund for employees 
maintained under the law of a State, a Territory, or the District of 
Columbia, shall be treated as amounts received through accident or 
health insurance. In general, an accident or health plan is an 
arrangement for the payment of amounts to employees in the event of 
personal injuries or sickness. A plan may cover one or more employees, 
and there may be different plans for different employees or classes of 
employees. An accident or health plan may be either insured or 
noninsured, and it is not necessary that the plan be in writing or that 
the employee's rights to benefits under the plan be enforceable. 
However, if the employee's rights are not enforceable, an amount will be 
deemed to be received under a plan only if, on the date the employee 
became sick or injured, the employee was covered by a plan (or a 
program, policy, or custom having the effect of a plan) providing for 
the payment of amounts to the employee in the event of personal injuries 
or sickness, and notice or knowledge of such plan was reasonably 
available to the employee. It is immaterial who makes payment of the 
benefits provided by the plan. For example, payment may be made by the 
employer, a welfare fund, a State sickness or disability benefits fund, 
an association of employers or employees, or by an insurance company.
    (b) Self-employed individuals. Under section 105(g), a self-employed 
individual is not treated as an employee for purposes of section 105. 
Therefore, for example, benefits paid under an accident or health plan 
as referred to in section 105(e) to or on behalf of an individual who is 
self-employed in the business with respect to which the plan is 
established will not be treated as received through accident and health 
insurance for purposes of sections 104(a)(3) and 105.

[T.D. 6722, 29 FR 5071, Apr. 14, 1964]