Human Resources

Group Life Insurance

WHOI automatically provides eligible employees with Basic Life insurance at no cost to you in an amount equal to one times your annual base salary, rounded to the next one thousand dollars.  An eligible employee may elect the lesser of $50,000 or one times annual salary.
 
Important Tax Information:  IRS regulations require that the premium for Basic Life insurance in excess of $50,000 is taxable to the employee.  For example, a basic life insurance benefit of $70,000 will require imputed income tax on the premium amount for $20,000 of excess coverage ($70,000 - $50,000).  Although the tax is minimal for most, employees have the right to waive their coverage amount to $50,000 to avoid the imputed income tax.  However, under strict IRS guidelines, coverage can only be waived during the initial eligibility, or during annual Open Enrollment.  

If you continue to work beyond age 65, your benefits will be reduced according to the chart below. This benefit reduction is a percentage of your Basic Life Insurance in effect before age 65.

Age % of Basic Life Insurance in effect prior to age 65
65-69 65%
70-74 45%
75-79 30%
80+ 20%

Basic Life Insurance Imputed Income

The IRS requires you to pay taxes on the value of WHOI paid Basic Life Insurance that is greater than $50,000.  This is called "Imputed Income".

According to the IRS, Imputed Income is calculated this way for WHOI provided Basic Life Insurance benefits in excess of $50,000:

  • Subtract $50,000 from the total value of the life insurance policy.
  • Divide this figure (the excess life insurance) coverage by 1,000.
  • Multiply this figure by the corresponding IRS rate based on the employee’s age bracket (see below).
  • Multiply this figure by 12 to calculate the annual amount.
  • Divide this figure by 26 to calculate the per biweekly pay period amount.
  • For reference, here is the most recent IRS age-band table used for coverage over $50,000:

Age

Rate Per 1000

Under 25

$.05

25 through 29

$.06

30 through 34

$.08

35 through 39

$.09

40 through 44

$.10

45 through 49

$.15

50 through 54

$.23

55 through 59

$.43

60 through 64

$.66

65 through 69

$1.27

70 and older

$2.06

For example, a 57-year-old employee with $150,000 in Basic Life Insurance benefit would have $19.85 per pay period for imputed income.

The calculation:

150,000 – 50,000 = 100,000 (amount over $50,000)

100,000 / 1,000 = 100

100 x 0.43 = $43.00

$43.00 x 12 = $516.00 (annual cost)

$516.00 / 26 = $19.85 (biweekly cost)

Last updated: November 3, 2017