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Basic Group-Term Life Insurance FAQs(PDF, 59KB)
Basic Group Term Life Insurance and "Other Imputed Income"
How much Basic Life/ADD Insurance coverage does an eligible employee receive with the City and who pays the premiums for this coverage?
Basic Life/ADD insurance coverage is paid 100% by the City and is automatically enrolled when an eligible employee is first eligible and equals one times annual base salary rounded up to the next nearest $1,000 e.g. if base salary is $61,299, basic life/ADD coverage amount is $62,000 each. Higher amounts of coverage are provided to Executive Pay plan employees and fixed amounts of coverage are provided to Elected Officials.
Is basic life/ADD insurance a taxable benefit?
This is a tax-free benefit for eligible employees, except for City paid basic life coverage (not ADD coverage) amounts above $50,000 per individual. The IRS calls this “excess coverage” or “taxable fringe benefit coverage”.
What is basic life insurance imputed income?
Imputed income refers to certain employer paid benefits received from the City that are not part of salary or wages, but under IRS regulations are a taxable value received from the employer and part of individual income as imputed income. Examples of benefits-related imputed income include group-term life insurance exceeding $50,000 and health insurance for a committed partner and/or committed partner families’ coverage that is considered non-qualifying for favorable IRS tax treatment.
How is the taxable benefit part of basic life insurance processed in our Payroll system?
Taxable life insurance coverage is processed as a taxable Imputed Income amount in the first two pay checks of each month. The per $1,000 “excess coverage” amount is multiplied by the employee’s age-band placement for the standard IRS cost of each $1,000 of “excess coverage”. Imputed income is recorded on a pay stub in the “Employer Paid Benefits” section and is called “Other Imputed Tax” with both current and year-to-date entries.
What are the age-bands for life insurance imputed income calculations?
Age bands are 5-year increments from 25 and under, 25 to 29, 30 to 34, 35 to 39 and so on, up to the last age band which is age 70+. Each age band has a different cost per $1,000 and that cost sharply increases as age and amount of excess coverage increases. The range of cost is as low as 5 cents per $1,000 for the under 25 age band and as high as $2.06 per $1,000 for the 70+ age band.
When is age-band placement for basic life insurance imputed income evaluated each year?
Age-band placement is evaluated annually at the beginning of each calendar year for any needed changes to imputed income amounts for the upcoming year and to spread the effect on net pay over as many pay periods as possible throughout the year.
Supplemental Life Insurance
Why should I consider Supplemental Life Insurance?
Life insurance can be an important step in safeguarding your family’s overall financial plan. You may have already considered purchasing term life insurance, or you may already have insurance through another source, but have you considered all the ways your family relies on you and how term life insurance can help bring some peace of mind to both you and those you would leave behind?
How much of life insurance do I need?
Experts recommend that you have at least five to ten times your annual income in life insurance protection. If you don’t think you already have as much coverage as you may need, this is your opportunity to secure additional protection for your family. You can purchase the amount that’s right for you.
Do I really need life insurance if I don’t have any dependents?
Many people assume that if they don't have dependents, they don't need life insurance…but that is not always the case. If anyone would be affected financially by your death for any reason — including funeral expenses, hospital bills, or mortgage, student loan or credit card debts — supplemental term life insurance policy can help cover these types of expenses. You should also consider parents or siblings who, while not your dependents, may receive financial support from you.
Do I have enough of life insurance?
Most people are confident with their decision to purchase life insurance to help with funeral expenses, estate administration costs, debts and medical expenses not covered by health insurance. When considering these costs, it’s vital to factor in expenses like your mortgage, college tuition, a spouse’s retirement, and the cost of services you currently provide which may need to be paid for in your absence (such as home maintenance, tax preparation, etc.) as well as hidden expenses currently paid for by your employer (such as healthcare, retirement funds and other benefits). Moreover, many people forget that certain life events result in an increased need for life insurance. For example, your children may be getting closer to college age, your spouse may not be working, or you may be supporting aging parents.
Will I have to keep track of another monthly bill?
We make it possible for you to purchase this coverage at group rates through convenient payroll deduction, so your peace of mind is as affordable and easy as possible. Conversion and Portability options allow you to take your coverage with you if you change jobs. And in the event that you become totally disabled, your coverage may be continued with no premiums due.
How do I view/update my beneficiary designations?
You can view and update your beneficiary designations at any time. Simply follow these steps:
- Log on to eBenMesa (if you need assistance with your login information, call Employee Benefits)
- Click on "Beneficiary Designations"
- Your chosen beneficiaries are listed on the right side of each section. You can choose to edit or remove them.
- You can enter a new beneficiary, save and then update the distribution amounts.