Employee Group Life Insurance Over 50K Page

Employer-paid premiums on group life insurance exceeding $50,000 coverage must be reported as taxable income for federal and Social Security taxes. The Employee Group Life Over 50K page allows you to set the parameters for calculating the additional earnings reported on W2 forms and, in some states, annual tax returns.

Important

If the employee pays the full premium, you can set up coverage as a regular Deduction record. In this case, you do not need to complete the Employee Group Life Over 50K page.

Calculating Group Life Insurance

The system uses the Employee Group Life Over 50K page to reference the following records:

Record	Data Referenced
Deduction Table	Two records, depending on whether your plan includes both employer-paid benefits and employee-paid deductions.
Group Life Insurance Table	Monthly premium indexed by age brackets.
Base Employee Information Page	Birth date for determining the employee's age.
Pay Rates Page (Primary Rate)	Gross salary and number of pays the employee receives annually.
Deductions Page	Deduction and benefit assigned to the employee, depending on the insurance.

The Employee Group Life Insurance Over 50K page enables you to tie all of these records together, so that the system can determine the taxable income adjustment for employer-paid benefits, employee-paid deduction amounts, and premiums paid to the vendor. During payroll processing, the system uses the following equations to determine the tax amounts to deduct:

Employee's Age	Current Year Employee's Birth Year.
Taxable Coverage	Group Life Coverage $50,000.
Additional Taxable Earnings	(Taxable Coverage ÷ $1,000) x Premium x (12 Months ÷ Number of Pays).
Adjusted Taxable Earnings	Additional Taxable Earnings Employee-Paid Deduction.

For additional information on group life insurance coverage, refer to Group Life Insurance Table.

Fields

Field	Description
Grplife Code	Code identifying the Deduction table record that defines group life insurance coverage as an employer-paid benefit. This record must be assigned to the employee in the Deductions page.
No. Pays	Number of times annually that the employee receives pay. The field defaults the value from the Pays/Year field of the employee's primary pay rate. The system uses this to calculate the employee's additional earnings from group life coverage. If needed, you may enter a different value.
Grplife Ins	Coverage amount allowed by the employee's group life policy. Your entry depends on one of two methods: Coverage Amount: Enter the total dollars of coverage. For example, if the employee's coverage is $120,000, enter this amount. Coverage Rate: Enter a decimal number representing the percentage of the annual salary from the employee's primary pay rate that is used to calculate the total coverage. For example, enter 250% as 2.5. The system recognizes the difference between the two methods based on the value entered. If the value is less than 10, then the entry is treated as a percentage; if it is 10 or greater, the value is the coverage amount. Example: If the gross salary in the employee’s primary pay rate is $40,000 and the coverage rate is 300% (entered as 3.0), the system calculates the coverage at $120,000 (Salary x Coverage Rate).
Self Paid Ins	If available, the code identifying the deduction record used during payroll processing to determine the insurance premium and adjust earnings for coverage paid by the employee. If all premiums are paid by the employer, leave this field blank. As with the entry in the Grplife Code field, this record must be set up in the Deduction table beforehand and must be assigned in the employee’s Deductions page.
Note	If all premiums are paid by the employer, leave this field blank.
Comments 1-2	Two lines for entering notes. Character/50, each line