In addition to benefits from health insurance plans, long-term care insurance plans, disability pensions, and workers’ compensation, there are some other types of sickness and injury benefits you might receive, some of which are taxable and some not.
Sick pay you receive under the Railroad Unemployment Insurance Act are taxable, but not if the pay is for an on-the-job injury. Black lung benefits payments are not taxable. If you are covered under the Federal Employees’ Compensation Act (FECA) and you receive personal injury or sick pay, you do not have to include the payments in your taxable income. In the case of death, these payments are not taxable to the beneficiaries either. But the amounts you receive as continuation of pay for up to 45 days while a claim is being processed are taxable income to you. Also, amounts that you receive under the FECA that reduce your social security or railroad retirement benefits may be taxable, as is the case with Workers’ Compensation.
Some other types of compensation you may receive for sickness or injury, that are not taxable to you, include compensatory damages, benefits you receive under a no-fault car insurance policy for loss of earnings, and compensation for permanent loss or loss of a function or part of your body.