Employee Group Life Over 50K Page
Under federal tax laws, employer-paid premiums for group life insurance coverage amounts exceeding $50,000 must be reported as taxable income for federal and Social Security. The Employee Group Life Over 50K page allows you to set the parameters used in calculating the additional earnings reported on W2 forms and in some states, on annual tax returns. For related information, refer to the Group Life Insurance Table.
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.
Menu Path: Human Resources > Entry & Processing > Employee > Employee Information > search for and select an employee > click OK to display the Employee Information detail page > click Payroll Information on the Action Bar, and then select Group Life
Calculating Group Life Insurance
The system uses the Employee Group Life Over 50K page to reference the following records:
Record | Data Referenced |
Deduction Table | Either employee deduction, employer benefit, or both records |
Group Life Insurance Table | Monthly premium indexed by age brackets |
Employee Information | Birth date for determining the employee's age |
Pay Rate Information | Annual gross salary and number of pays (primary rate) |
Employee Deductions | Deduction and benefit assigned to the employee |
Before adding an employee who has group life coverage, you need to set up records in two tables: Deduction and Group Life Insurance. You can then assign the applicable Deduction records in the Employee Deductions page.
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 formulas to determine the tax amounts to deduct from the employee's pay:
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 ÷ No. of Pays) |
Adjusted Taxable Earnings | Additional Taxable Earnings Employee-Paid Deduction |
Fields
Field | Description |
|---|---|
Grplife Code | Code identifying the Deduction table benefit record for group life insurance coverage. For related information, refer to Deduction Table. |
Important | This record must be set up in the Deduction table beforehand and must be assigned to the employee in the Employee Deductions Page. |
No. Pays | Number of times annually that the employee receives pay, as defined in the Pays/Year field of the employee's primary pay rate. The system uses this value to calculate the employee's additional earnings from group life coverage. |
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.
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. As with the entry in the Grplife Code field, this record must be set up in the Deduction table beforehand and must be assigned to the employee in the Employee Deductions page. |
Note | If all premiums are paid by the employer, leave this field blank. |
Comments 1-2 | Two fields for entering notes on the insurance coverage. Character/50 |