Taxable Benefit
Health insurance premiums paid by the employer on behalf of an employee are considered a taxable benefit and must be added to the employee's gross income. This applies to supplemental health insurance, dental plans, and vision coverage. The full premium amount is included in taxable income.
Practical Impact
If an employer pays ₪300/month for health insurance, the employee's taxable income increases by ₪300/month. At a 35% marginal rate, this costs the employee approximately ₪105/month in additional tax. Despite the tax, employer-provided health insurance is still beneficial as employers often negotiate group rates that are significantly cheaper than individual policies.
Tax-Free Health Benefits
- Health checkups provided to all employees (considered a safety/welfare measure)
- Occupational health services required by law
- Emergency medical services at the workplace
- Mental health counseling programs (EAP) – may be exempt as welfare
בסיס חוקי
- Section 2(2) – Employment income
- Income Tax Regulations – Benefit valuation
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.