Group Term Life and Disability Benefit Tax Notification

The Internal Revenue Code requires employers to include additional income for group term life insurance premiums for coverage in excess of $50,000 on employee W-2 or 1099 forms. The IRC provides the Uniform Premiums Table (below) for computing the value of the premium to employees rather than the actual premium cost.

The IRS requires W-2 forms be prepared for any worker who received disability benefits during the year, whether taxable or not. The taxable portion depends on the percent of premium paid by the employer:

· If the employer pays all of the premium, the benefits paid to the employee are taxable.

· If the employee pays all the costs of coverage, the benefits are not taxable.

· If the employer and the employee share the cost, the percent of the employer’s contribution is taxable and the rest is not taxable.

· Employee contributions made on a pre-tax basis (such as Section 125 or cafeteria plans) are considered employer-paid dollars for tax purposes.

If the age of the employee on the       The monthly cost per

last day of his/her tax year is:             $1,000 life insurance is:

  Under 25                                                 $0.05

  25-29                                                      $0.06

  30-34                                                      $0.08

  35-39                                                      $0.09

  40-44                                                      $0.10

  45-49                                                      $0.15

  50-54                                                      $0.23

  55-59                                                      $0.43

  60-64                                                      $0.66

  65-69                                                      $1.27

  70 and older                                            $2.06

IRS Publication 15-B (2011),  pp. 11-12