|
 What action do I take if an employee terminates employment?
If an employee terminates employment, please draw a line through the name and product type, indicate “terminated”, and deduct the amount from the Total Due on your bill.
Back
How long does it take to receive policies and certificates?
If everything that is needed has been received, policies and certificates will be mailed within 15 working days of receipt in our Home Office.
Back
How do I make changes to my group policy (waiting period, benefits, etc.)?
To make changes to the waiting period, send written notice to the USAble Life Customer Service.
To make benefit changes and/or benefit additions, contact the Renewal Analyst in the USAble Life Group Underwriting Department at 1-800-648-0271 with a benefit request.
Back
What form do I complete to have USAble Life prepare W-2's for paid disability claims?
Click here to complete the form on-line
Back
What are my W-2 options if I have a group with disability coverage?
All groups with disability coverage have the option to have USAble Life prepare W-2's annually for disability claims. All new groups must complete a USAble Life W2 Agreement. If you are an existing group and are interested in USAble Life preparing W-2's annually, please complete the USAble Life W2 Agreement.
Contact 1-800-648-0271 ext. 23721 for further information.
Back
What leads to the taxability of disability benefits or third party sick pay?
Short-Term and Long-Term disability benefits may or may not be considered taxable income. The taxability of these benefits is determined by who pays the premium and how it is paid. Following are a few examples of when a disability benefit may or may not be considered as taxable income:
- If the Employer pays 100% of the premium, then the benefit is 100% taxable.
- If the Employer pays a portion of the premium and the Employee pays the remainder of the premium on an after tax basis, the benefit is taxable only for the portion that the Employer pays.
- If the Employer pays a portion of the premium and the Employee pays the remaining portion of the premium on a pre-tax basis, the benefit is 100% taxable.
- If the Employee pays the entire premium on a pre-tax basis, the benefit is 100% taxable.
- If the Employee pays the entire premium on an after tax basis, the benefit is not taxable.
As you will note, if the Employee pays any portion of the premium on an after tax basis, this portion of the benefit is not taxable, and if the Employee pays any portion of the premium on a pre-tax basis, this portion of the benefit is taxable. Pre-tax contributions are deemed to be “Employer contributions” and, therefore, result in taxable benefits.
ALL disability payments, regardless of their taxability must be reported to the government on a Form W-2. If the disability benefit is taxable, this amount should be recorded in box 1 under wages, tips, and other compensation. If the disability benefit is non-taxable, this amount should be recorded on the W-2 in box 13, with the description in box 14. The description in box 14 should be reflected as Third Party Sick Pay.
Back
What are the effects of a taxable disability benefit?
When a disability benefit is considered taxable, these benefits become subject to tax withholdings. These withholdings include FICA (Social Security and Medicare tax), and FIT (Federal Income Tax). FICA and FIT only apply to the portion of the benefit that is considered taxable based on the descriptions provided above.
Federal Income Tax withholding is voluntary rather than mandated by Federal law. The Employee will be responsible for electing how much FIT to withhold (if any) and making any changes to this amount during the duration of the claim.
Back
How does USAble Life report all withholdings (ie, FICA & FIT)?
All FICA & FIT withheld on disability payments are deposited by USAble Life through the Federal Reserve System using USAble Life’s Federal Tax Identification number. These deposits are made on a bi-weekly basis to coincide with the frequency that Disability Income Withholding Reports are distributed.
Back
Can you request monthly or annual FICA reports?
Yes. LTD and STD FICA reports are distributed bi-weekly, as well as quarterly and yearly summaries. These reports are generated automatically and will be sent to all Employers that have benefits paid during the applicable periods. You can request these additional reports by contacting the USAble Life FICA representative at (800) 648-0271.
Back
What procedures should be followed if the employer has not matched FICA?
This question should be answered by your tax advisor. USAble Life only withholds and submits the Employee’s portion of FICA as reflected in the reports provided to your office.
Back
Does everyone get a FICA report?
No. Only groups that had employees on disability in that month will receive the monthly report. Every group will receive a report at the end of the year if any disability benefits have been paid.
Back
Who is responsible for the federal and applicable state unemployment tax for disability payments?
The Employer will be responsible for FUTA and SUTA taxes on both Short-Term and Long-Term disability payments. Please refer to IRS Publication 15A, under the sections regarding Sick Pay, for details on instances in which the payments may be exempt from FUTA.
Back
If the employee is no longer employed with the employer group, what are the tax reporting requirements? If the employer group has terminated their USAble Life coverage, who reports W-2/FICA to the government?
The Employer is still required to report all disability benefits, as well as any withholdings. If the Employer group has terminated their USAble Life coverage, the W-2 / FICA reporting requirement remains the same.
Back
If the benefit provided by USAble Life is non-taxable, is a W-2 required?
Yes. A W-2 is still required and it should show the benefits as Third Party Sick Pay.
Back
Is the employer required to issue a separate W-2 for third party sick pay?
No. The Employer can either include the Third Party Sick Pay with the taxable wages received
during active employment with the Employer, or they may choose to issue a separate W-2.
Back
Whose Tax ID number is listed on the W-2?
We will use USAble Life’s tax ID number for all generated LTD claim W-2’s and STD W-2’s. If your company has elected to prepare your own W2’s for sick pay, your company’s tax identification will be used.
Back
NOTE: Please be aware that USAble Life is not a tax advisor and the following information is only to assist you with some general tax questions. Any specific or detailed questions should be addressed with your own tax consultant.
|
F
A Q