Abe is an employee of Haddock, Inc. Haddock provides basic health and accident insurance to all its employees through a contract with Minor Accident Insurance Company. Because the Minor policy does not cover 100% of medical costs, Haddock provides all executive officers with a self-insured plan to pay any medical costs not covered by Minor's policy. Abe is eligible for both plans. During the current year, pre- miums on the Minor policy for Abe were $1,450. Abe is reimbursed for $1,900 of his medical costs from the self-insured plan.

a. What are the tax consequences to Abe of the payments made by Haddock?

b. What difference would it make if all employees were covered under both plans?