Final answer:
Sarah's employer-paid hospitalization insurance premiums can indeed be excluded from her gross income after retirement (answer A. True). This falls under employment-based insurance, which may not be taxable in such circumstances. However, it's always best to consult current tax regulations or a tax professional for personal situations.
Step-by-step explanation:
The answer to the question of whether Sarah's employer-paid hospitalization insurance premiums can be excluded from her gross income after retirement is A. True. Under typical circumstances, the premiums paid by an employer for a retiree's health plan are not considered taxable income. This situation falls under the purview of employment-based insurance, which is health plan coverage provided wholly or in part by an employer or union for the employee and potentially their family.
It's important to distinguish this from retirement insurance, which refers to social insurance programs like Social Security and Medicare. These programs are funded by both employee and employer contributions and provide income and health care benefits to individuals after retirement, but they are distinct from the fringe benefits provided by employers, such as health insurance premiums for retirees.
Employment-Based Insurance after Retirement
When an employee retires, the benefits they receive from their employer, including paid insurance premiums, can often be tax-free. This extends to hospitalization insurance premiums that are paid by the employer for the retired employee. However, it is essential to consult updated IRS rules or seek professional tax advice to understand any specific tax implications and conditions that might apply to one's personal situation.