Specific medical expenses can be paid for or reimbursed by a group health plan tax-free, even if care is provided overseas. For example, inpatient hospital care, lodging, and meals for the patient while in the hospital are covered by the plan without the worry of taxes.

However, lodging and meals for the entire outpatient care may not be reimbursed on the same tax-favored basis. Travel expenses paid for by the plan sponsor would appear to be taxable since the employee is choosing for personal reasons, not out of medical necessity, to travel abroad to obtain non-tax exempted medical treatments.

Any cash payments or financial incentives provided directly to the participant under the Global Health Care option are fully taxable. However, a plan sponsor could waive medical plan co-pays or put an incentive payment in the employee’s healthcare reimbursement account, and those payments would be tax-free. It would be prudent to assume that a plan sponsor’s legal risks will increase as the amount of the incentive is raised for consumers who choose Global Health Care.