GEHA Health Balance Rewards Card Taxable?

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seeingeyestrike
Posts: 34
Joined: Mon Sep 10, 2012 8:12 pm

GEHA Health Balance Rewards Card Taxable?

Post by seeingeyestrike » Fri Apr 14, 2017 3:16 pm

I thought I'd ask this question here since I know there are a decent number of GEHA HDHP member bogleheads (and other HDHP members who might receive similar benefits).

Last year (2016) was my first year with a GEHA HDHP. As part of this plan's benefits, I filled out my online health assessment to qualify for a $75 Visa prepaid rewards card which I received in December 2016. Is this $75 taxable? I have not received a 1099-MISC, but most of my HSA tax documents get sent after the April filing deadline (in case you make 2016 contributions in 2017) so not *yet* receiving a 1099-MISC doesn't really tell me anything.

Additional information that I've found:

GEHA website states: "The Internal Revenue Code provides that the value of gift cards to individuals can be considered taxable income."
- I find the use of the wording "can be" ambiguous

From a google search of Internal revenue code gift cards, I've found a lot of information stating that if an employer gives a gift card to an employee, it's taxable if it's over $100 or equivalent to cash
- I think my 2016 card is equivalent to cash but I can't confirm this (I think the program underwent some changes in 2017 and I am now limited in what I can spend my 2017 card on; I'm not sure about the 2016 card)
- I am also unsure if my health plan giving me a cash equivalent gift card is the same thing as my employer giving me one.

This document https://www.irs.gov/pub/irs-wd/201622031.pdf seems to imply that employer provided health incentives are taxable but I'm still unsure if my card falls in the employer provided health incentive category

Snezz1e
Posts: 26
Joined: Wed Mar 14, 2012 11:48 am

Re: GEHA Health Balance Rewards Card Taxable?

Post by Snezz1e » Fri Apr 14, 2017 4:01 pm

The general rule is all income is taxable unless excluded by law. Based on the IRS memo it is only expendable from income if it is used towards medical care. The 2016 card had no restrictions so you could use it towards non-medical care. I think it should be taxable following the letter of the law.

If you used the $75 towards medical care you could argue it's non taxable. It's kind of a weak argument though since this argument would fail with any other type of normally taxable income.

Another argument that is that the $75 is a return of premiums paid for insurance so it's not taxable. Doesn't apply to Feds since our premiums are tax deductible but could apply to those who don't deduct insurance premiums such as a ACA plan.

I've had the GEHA HDHP for several years and never reported it as income because I never stopped to think about if it was taxable or not. Never received a 1099 for it. I certainly won't be amending my return to report it but I may report it in future. Then again the new 2017 cards are limited to medical expenses and FSA costs so I think there's a stronger argument that it's not taxable income. I think the GEHA disclaimer is there because there's no definitive ruling whether is taxable or not. I can't recall the same warning in prior years. The change is probably because they realized under the old unrestricted card it was definitely taxable.

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