Question

The insured has dental coverage through their employers group plan. the employer pays the entire premium. which statement is correct about the tax treatment of the premium and any benefits

A) The premium is taxed, and benefits are tax-free.
B) Both premium and benefits are tax-exempt.
C) The premium is tax-free, but benefits are taxed.
D) The premium and benefits are both taxable.

Answer 1

In an employer-paid group dental plan, the premiums are typically not taxable for the employee and the dental benefits received are tax-free for qualified dental expenses.

Step-by-step explanation:

In the context of an employer-paid group dental plan, the typical tax treatment in the United States is such that the premium paid by the employer for the employee's coverage is not considered taxable income for the employee. Thus, the employer can deduct the cost as a business expense and the employee does not report the premium as income. Furthermore, any dental benefits received under this plan are generally tax-free when used to pay for qualified dental expenses. Consequently, the correct answer to the student's question would be option B) Both premium and benefits are tax-exempt.