Treasury Regulations, Subchapter C, Sec. 31.3121(a)(4)-1
From TaxAlmanac
Sec. 31.3121(a)(4)-1 Payments on account of sickness or accident disability, or medical or hospitalization expenses
The term “wages” does not include any payment made by an employer to, or on behalf of, an employee on account of the employee's sickness or accident disability or the medical or hospitalization expenses in connection with the employee's sickness or accident disability, if such payment is made after the expiration of 6 calendar months following the last calendar month in which such employee worked for such employer. Such payments are excluded from wages under this exception even though not made under a plan or system. If the employee does not actually perform services for the employer during the requisite period, the existence of the employer- employee relationship during that period is immaterial.
