For more information, see Pub. Employer's Tax Guide to Fringe Benefits. Health insurance plans. If you pay the cost of an accident or health insurance plan for your employees, which may include an employee's spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. Generally, this exclusion applies to qualified long-term care insurance contracts.
Medical savings accounts.
To the extent that it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. Employee contributions to their MSA through a payroll deduction plan must be included in wages and are subject to social security, Medicare, and FUTA taxes, and income tax withholding. Medical care reimbursements. Medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. The benefits are subject to income tax withholding and employment taxes.