It is common practice for US-based multinational companies to adopt executive severance plans to provide for additional benefits to be paid to executives in the event of certain specified termination events, including those in connection with the change of control of the parent. These benefits may consist of cash payments, favorable treatment of equity awards, and/or other benefits (e.g., payment of health insurance premiums). These types of plans help companies recruit and retain talent and…
Where you have employer subsidized self-insured medical benefits being provided to highly compensated individuals (“HCIs”) after employment and that subsidy is only offered to HCIs, you run the risk that the actual medical benefits provided (not the premiums) may be taxable to the executive under 105(h).