When computing the amount to include on the employee’s W-2 for group life insurance coverage in excess of $ 50,000 is there any provision for basing the computation on the actual premium cost rather than the amount from the IRS table where the actual premium cost is LESS than the amount from the table? The inclusion amount increases dramatically for older employees even though under the group plan the rate cost is the same as for younger employees. Secondly, many employees take advantage of ability to purchase additional coverage which they pay for 100% (in most cases on a pre-tax basis) but still are required to include this coverage in the amount over $ 50,000. Correct? Any thoughts on a more favorable way to structure this fringe benefit?
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No Provision
Art, an inquiry into Code 79 and Regs reveals no alternative to the table presented in §1.79-3. There is reference to including the "cost" of the coverage, but no provision to adopt the actual cost of the premiums as opposed to the table.
Certainly the difference is not much. This must be a very large employer to be able to acquire such low rates. If the insurance company were forthright about the matter, they would tell you that there is more profit in the life insurance than in the medical premiums. That is why most of them refuse to issue medical policies without the employer having to pay some life insurance along with it. The profits from the life help offset the risk in the medical coverage. -
Thanks for your quick reply. I did not find anything either, but it always is good to check this board.Comment
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