If the employer is doing it the right way, it should not be taxable.  If they were doing it the wrong way, I don't think the 1099-NEC is the proper form.  It should be a 1099-R or W-2.

A local city has a plan to pay retirees a fixed amount (about $200 a month) as reimbursement for health insurance and other medical expenses.  At retirement, the employee is asked to sign a document acknowledging that all of the payments will be used for health insurance or other medical expenses.  I had clients, a married couple, who retired from the same city.  One of them received a 1099-R for the monthly payments, and the other didn't.  I suggested they find out the reason, and it turned out that one of them had not signed the required paperwork.  After doing that, no 1099-R was issued. 

Your client should check with the employer about whether a similar situation exists.  Or, this may be a defective "Retiree Reimbursement Arrangement."  See

https://www.benefitspro.com/2022/10/06/help-your-employees-think-about-retirement-now-with-a-rra/?sl...