Group-Term Life Insurance Coverage This section provides basic tax information about group-term lifeinsurance coverage. Group-Term Life Insurance This is life insurance that meets all the following conditions. It provides a general death benefit that is not included inincome. You provide it to a group of employees. It provides an amount of insurance to each employee based ona formula that prevents individual selection. This formula must usefactors such as the employee's age, years of service, pay, orposition. You provide it under a policy you carry directly orindirectly. Even if you do not pay any of the policy's cost, you areconsidered to carry it if you arrange for payment of its cost by youremployees and charge at least one employee less than, and at least oneother employee more than, the cost of his or her insurance. Determinethe cost of the insurance, for this purpose, as explained underGroup-Term Life Insurance in Publication 15-A. Employee.For this purpose, an employee is one of the following. A person who works for you whose legal relationship to youis that of an employee. A full-time life insurance agent. A person who was formerly your employee. Effect of permanent benefits.Permanent benefits are economic values you provide under a lifeinsurance policy that extend beyond one policy year, such as paid-upor cash surrender value. Life insurance that includes permanent benefits is group-term lifeinsurance only if it meets certain conditions. For more information,see section 1.79-1 of the regulations. The 10-employee rule.Generally, group-term life insurance is life insurance that youprovide to at least 10 full-time employees at some time during theyear. For this rule, count employees who choose not to receive theinsurance unless, to receive it, they must contribute to the cost ofbenefits other than the group-term life insurance. For example, countan employee who could receive insurance by paying part of the cost,even if that employee chooses not to receive it. However, do not countan employee who must pay part or all of the cost of permanent benefitsto get insurance, unless that employee chooses to receive it. Exceptions.Even if you do not meet the 10-employee rule, two exceptions allowyou to treat insurance as group-term life insurance. Under the first exception, you do not have to meet the 10-employeerule if all the following conditions are met. Valencia alloggio in albergoIf evidence that the employee is insurable is required, itis limited to a medical questionnaire (completed by the employee) thatdoes not require a physical. You provide the insurance to all your full-time employeesor, if the insurer requires the evidence mentioned in (1), to allfull-time employees who provide evidence the insurer accepts. You figure the coverage based on either a uniform percentageof pay or the insurer's coverage brackets. Under the second exception, you do not have to meet the 10-employeerule if all the following conditions are met. ERROR MSGYou provide the insurance under a common plan covering youremployees and the employees of at least one other employer who is notrelated to you. The insurance is restricted to, but mandatory for, all youremployees who belong to or are represented by an organization (such asa union) that carries on substantial activities besides obtaininginsurance. Evidence of whether an employee is insurable does not affectan employee's eligibility for insurance or the amount of insurancethat employee gets. To apply either exception, do not consider employees who weredenied insurance for any of the following reasons. They were 65 or older. They customarily work 20 hours or less a week or 5 months orless in a calendar year. They have not been employed for the waiting period given inthe policy. This waiting period cannot be more than 6 months. Accidental or other death benefits.A policy that provides accidental death benefits or death benefitsother than general death benefits (travel insurance, for example), isnot group-term life insurance. Policy covering employee's spouse or dependent.hoteles BerlinA policy that provides insurance on the life of your employee'sspouse or dependent is not group-term life insurance. However, you maybe able to exclude the cost of this insurance from your employee'swages as a de minimis fringe benefit. See chapter 4. Exclusion From Wages You can generally exclude group-term life insurance coverage youprovide to an employee from the employee's wages as you withholdincome tax and pay federal unemployment tax. In addition, you canexclude a limited amount of coverage for other employment tax andreporting purposes. Exclusion limit.You can generally exclude from an employee's wages the cost of upto $50,000 of group-term life insurance coverage. Coverage over the limit.If you provide an employee with more than $50,000 of coverage atany time during the year, you must include in the employee's wages thecost of insurance that is more than the cost of $50,000 of coverage,reduced by any amount the employee pays toward the insurance. Figurethe cost of the insurance as explained under Group-Term LifeInsurance in Publication 15-A. Solna accommodationPlans that favor key employees.Generally, if your group-term life insurance plan favors keyemployees, you must include the entire cost of the insurance in yourkey employees' income. However, this rule generally does not apply tochurch plans. A plan favors key employees if it favors them as to eligibility toparticipate or as to the type and amount of benefits it provides.Apply the participation and benefits tests (discussed later)separately to your active and former employees. Key employee.A key employee during 2000 is an employee or former employee who isone of the following. An officer having, for any year listed below, annual pay ofmore than the listed amount. 1996 -- $60,000 1997 -- $62,500 1998 -- $65,000 1999 -- $65,000 2000 -- $67,500 A person who, for 2000 or any of the 4 preceding years, wasany of the following. One of the 10 employees having annual pay of more than$30,000 and owning the largest interests in your business. A 5% owner of your business. A 1% owner of your business whose annual pay was more than$150,000. To determine ownership in (2) above, treat your employee asowning both his or her own interest and any related person's interest.The term "related person" includes the employee's spouse,children, grandchildren, and parents. It also includes anycorporations, partnerships, estates, or trusts in which the employeehas at least a 5% interest. A former employee who was a key employee upon retirement orseparation from service is also a key employee. Participation test.Your plan meets this test if all of the following are true. It benefits at least 70% of your employees. At least 85% of those employees are not keyemployees. It benefits employees who qualify under a set of rules youset up that do not favor key employees. Your plan also meets this test if it is part of a cafeteria plan(discussed earlier) and it meets the participation test for thoseplans. When applying this test do not consider employees who meet thefollowing requirements. Have not completed 3 years of service. Are part time or seasonal. Are nonresident aliens who receive no U.S. source earnedincome from you. Are not included in the plan but are in a unit of employeescovered by a collective bargaining agreement, if the benefits providedunder the plan were the subject of good-faith bargaining between youand employee representatives. Benefits test.Your plan meets this test if it does not favor key employees as tothe type and amount of life insurance it provides. Your plan does notfavor key employees just because the amount of insurance you provideto your employees is uniformly related to their pay.