Health care premiums sometimes taxed The cost, reported in Box 12 with the code DD, includes both the employer and employee share of health insurance premiums for the year. The reporting requirement is supposed to help employees appreciate and understand the value of their health benefits. If employees cover a domestic partner or same-sex spouse, the value of the partner/spouse's coverage (less any after-tax payments made by the employee) is generally added to their income and they pay federal tax on it. [...] while many employees get to pay their share of health insurance premiums with pretax dollars, many don't. Section 125 plansIf an employer sets up a 125 plan, employees can pay for health care premiums with pretax dollars.