Skip to main content

Legal

Tax & Accounting

Trade & Supply

Risk & Fraud

News & Media

Books

Developers

Topics

Group Term Life

Group Term Life (GTL) insurance is a type of term insurance offered by employers as a group benefit to eligible employees.
Employers usually pay most or all of the premiums for basic coverage. Extra coverage may be offered for an extra premium charged to the employee.

Taxes

There are no tax consequences if the total amount of coverage doesn't exceed $50,000.
If an employer offers GTL in excess of $50,000, the employer’s portion of the premium in excess of $50,000 needs to be included in taxable wages for the employee.
GTL in excess of $50,000 is taxable for the following per IRS rules:
  • FICA (SS/MED) - Taxable
  • Federal Withholding – Taxable
  • State Withholding – Taxable (PA Exempt)
  • Local Withholding – Taxable (PA Exempt)
  • Federal Unemployment - Taxable
  • State Unemployment – Taxable

Record the GTL amounts

Any employee that has GTL in excess of $50,000 will need to report the GTL amount through payroll.
The amount will be specific to each employee. Your accountant or insurance plan administrator should be able to advise on the amount that you'll need to report.
To add the GTL amount to an employee’s W-2, you need to record the amount on a payroll check.
You can record the amounts:
  • On the same check as standard wages for a scheduled pay date (recommended).
    • Recording GTL on the same check as standard wages for a scheduled pay date will let you enter the amount as an extra line item on the same check as the employee’s regular wages.
    • With this option, the GTL amount combines with the regular wages for your standard pay period and the required taxes deducts from the employee’s regular wages.
    • There are no extra processing fees related to this option.
  • On a separate check and separate/unscheduled pay date.
    • Since GTL is excluded from net pay but Social Security, Medicare, federal, state, and local tax withholding amounts are required (exempt PA State and PA Local), entering GTL without wages will cause a negative check. You can't submit or process negative checks.
    • To process GTL on a separate check without extra wages, you'll need to add wages to cover the required taxes (gross up) or the company will need to cover the cost of the taxes for the employee.
    • Contact your Payroll Specialist if you need to process GTL on a separate check without the extra wage.
Internal use only
If GTL payroll item is not available for the client to access, submit a Payroll Item Request form and exclude from net pay detailing the taxability mentioned earlier.
If GTL can't be recorded on a live payroll check, enter the deduction item called GTL which has no impact to the taxability of the item resulting in an in and an out.