Regular or fixed-term employees scheduled to work 20 hours or more per week are automatically covered as of their date of hire by term life insurance equal to 2.25 times their July 1 rate of pay or prior calendar-year Rensselaer earnings, whichever is greater, up to a maximum basic life benefit of $600,000. This coverage is given to each employee at no cost through Guardian, and evidence of good health is not required. This coverage also includes an equal amount of accidental death and dismemberment insurance.
Benefits begin to reduce at age 65. All employees (equally) receive the following age reductions for Basic Life insurance only:
• To 75% (of original) at age 65
• To 50% (of original) at age 70
• To 25% (of original) at age 75
• To 5% (of original) at age 80
The above age reductions apply for the employee's age as of January 1, 2019, and all percentages above are shown as a percent of their benefit level upon reaching age 65.
Rensselaer pays the full cost of this benefit. However, the value of Basic Life insurance coverage in excess of $50,000 is considered imputable taxable income that is reported on the employee's W-2 form at the end of the year.
Rensselaer is required to withhold FICA (Federal Insurance Contributions Act) tax on the cost of the life insurance coverage over $50,000 when an employee’s benefit exceeds $50,000. This cost is not based on the actual cost of the premium charged by the insurance company, but on costs established by the Internal Revenue Service (IRS). Before making a decision, employees may want to calculate the additional tax that would be imposed on their life insurance over $50,000.
IRS Calculation Of Monthly Cost Per $1,000 Of Life Insurance On The Excess Over $50,000:
|Under age 25||$.05|
|Ages 25 through 29||$.06|
|Ages 30 through 34||$.08|
|Ages 35 through 39||$.09|
|Ages 40 through 44||$.10|
|Ages 45 through 49||$.15|
|Ages 50 through 54||$.23|
|Ages 55 through 59||$.43|
|Ages 60 through 64||$.66|
|Ages 65 through 69||$1.27|
|Over age 69||$2.06|
Employees have the option to limit their life insurance to $50,000 to avoid the imputable taxable income.
For information about the imputable taxable income, read IRC section 79 of the Employer's Tax Guide to Fringe Benefits, which is available for reference only.
More detailed information regarding this benefit is contained in the Summary Plan Description available at the Division of Human Resources.
Please note that employees must designate any life insurance beneficiaries by logging into Benelogic.