How much group-term life insurance, if any, will be included in the employee’s income in...

Under Internal Revenue Code Section 79, the IRS provides a specific tax exclusion for employer-provided group-term life insurance (GTL) coverage. The first $50,000 of the face value of such a policy is completely excluded from an employee ' s taxable income. Taxable income is only imputed to the employee when the total coverage provided by the employer exceeds this $50,000 threshold. In this scenario, the employer is providing a benefit exactly equal to $50,000. Because the coverage does not surpass the statutory limit, there is no " excess coverage " to value using the IRS Premium Table (Table I). Consequently, the amount to be included in the employee’s gross income for the month of September is $0.00. Had the coverage been higher, the value of the excess would be subject to Social Security and Medicare taxes, even if the premiums were paid entirely by the employer.