TN 8 (11-93)

RS 01401.230 Group-Term Life Insurance


Prior to 1988, the cost (premiums) of employer-provided group-term life insurance was excluded from wages.


1. General

Beginning 1988, the employer cost of group-term life insurance on coverage that exceeds $50,000 is wages.

REFERENCE: P.L. 100-203

EXAMPLE: Employee A's group term life insurance coverage is $150,000. The excess coverage amount is $100,000 ($150,000 minus $50,000). Under the employer's plan, the premium cost per $1,000 of coverage is $.17 a month. To determine the amount reported as wages, multiply the excess coverage amount by the monthly premium cost and then by the total number of months the employee received coverage (100 × $.17 premium cost × 12 months = $204).

2. Former Employees

The employer cost of group-term life insurance for individuals who separated from employment before 1989 continues to be excluded from wages if the employee was not reemployed by the same employer after the termination date.

REFERENCE: P.L. 100-647

If an employer continues to provide group-term life insurance coverage that exceeds $50,000 to an individual who separated from employment after 1988, the former employee is required to pay the employee portion of the social security tax directly to IRS. The employer is required to report the cost of the group-term life insurance as a separate amount on the Form W-2. This rule applies after 1990.

REFERENCE: P.L. 101-508

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RS 01401.230 - Group-Term Life Insurance - 08/31/2004
Batch run: 07/03/2014