Payroll: Group Insurance

Payments by an employer to group insurance or pension plans are excluded.

Payments By Employer

An additional clarification related to this issue is that “payments by an employer” to group insurance or group pension plans for employees, other than those covered by Rule BM‐PAYI‐PF00A and Rule BM‐PAYE‐P02F2. These “group” plans are distinctly different from “individual” plans for two main reasons: (1) the payments are of “employer” monies and usually have stringent vesting requirements, such as five-year employment, and (2) the employer payments are in no way considered as part of the employee wages.

Note: Notwithstanding any determination by an agency of the United States government that a portion of these employer payments is considered income to an employee, the entire payment made by an employer using employer funds is excluded from remuneration for Workers Compensation premium purposes. Payments to a group health insurance plan need to be paid directly from the employer to the carrier in order to be excluded. These payments should not be considered as part of the employee’s payroll regardless of the employer’s legal status.

Payments By Employee

If payments are being paid directly to the employee and then, in turn, the employee directly purchases the health insurance, such payments are to be included as remuneration.

Once the employee has control of the funds they are considered remuneration for WC purposes. If an employer sets aside funds which the employee cannot put in his/her pocket, these funds are not remuneration for WC purposes. If an employee has control of funds then the entire amount (pocket + contribution) is remuneration for WC purposes.

Related Rules

401k savings plans and IRS Section 125 cafeteria plans are also addressed in Basic Manual Rule BM‐PAYR‐PFDD1. In general, the employee contribution is included, but the employer contribution is excluded. Read the rule for details.