Any employer contributions to an employer-sponsored accidental death and dismemberment policy are not taxable to employees. In most cases, however, employees pay for their own AD&D premiums. Generally, employees pay for AD&D benefits on an after-tax basis, and as a result, benefits recieved are not subject to income tax. For employers, premiums for both the accidental death benefit coverage and the dismemberment coverage are deductible, as long as they are an ordinary and necessary business expense. The IRS governs the amount recieved under accident and health insurance plans. Depending upon your individual situation, the amount you recieve under your AD&D plan may vary. Therefore, it is important to know what’s covered under your plan and how much you are entitiled to recover.