Taxable Group Life Insurance Benefits

Taxable Group Life Insurance Gross = Annual Benefits Base Rate. **This calculation method is for classified and unclassified employees, a different method is used for Faculty (LFC). Please contact the Payroll office for more information. 

The Annual Benefit Base Rate is calculated by taking the compensation rate times 26 or 2080 depending on whether the employee is exempt or nonexempt. It currently does not include any additional earnings such as longevity, shift, overtime, etc. Internal Revenue Service Code Section 79 requires inclusion in an employee federal and state taxable gross the cost of group term life insurance coverage in excess of $50,000 provided to an employee by an employer. Employees covered by KPERS death and disability insurance being paid more than $1282.05 per bi-weekly pay cycle (based on 26 pay dates) are subject to the provisions of Code Section 79. 

Taxable group life insurance is calculated as follows: Step 1. (Annual TGL gross*) x 150%) - 50,000 = Calculate taxable coverage Step 2. (Taxable coverrage/$1,000) x age rate = Imputed Income Step 3. Multiply the amount arrived at in Step 2 by 12 and divide this result by the number of payroll periods in the year (26).
*annual salary amount

The uniform premiums prescribed by the IRS regulation can be found on the Human Resources - Benefits website ».

 


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