Workman's comp tax question.

[Guest Carolynn]

We are a TPA and increasingly have plans across several states. In our state, Ohio, ER's don't pay workman's comp taxes on EE money run thru the Cafeteria Plan. Is this true for all states, or any other states? I haven't found a site to give us this information, and oddly enough, people from other states can't find the information about their own state either! Thanks in advance for any help or comments.

[Guest Ric Joyner,CFCI]

Hi, usually work comp is not considered a tax but an insurance premiums thus is not eligible for a reduction in premiums. This is done industry wide and I do not know of any state that allows it reduced by cafeteria plan participation.

[GBurns]

Probably the best place to get proper info on this would be from someone who handles plans Davis-Bacon and related acts (DBRA) and other prevailing wage situation. I remember that most keep such info, some of it came from NCCI and some from the DOL Wage & Hour division.

[Kirk Maldonado]

I've been told that workers' compensation premium payments are reduced in California where the employees make pre-tax contributions through a cafeteria plan. However, I've never seen that in print anywhere, and I've never done the research.

[KIP KRAUS]

CAROYLNN

I guess I’m confused, but that’s not uncommon at times. My understanding of WC is that the employer pays the premiums in most if not all states. Do some states make employee’s pay the premiums?

I know that in California and New York employees pay a portion of the short- term disability premiums mandated under the WC laws. I’m not sure about New Jersey, Rhode Island and Hawaii.

I also was under the impression that WC benefits were not taxable, but short-term disability is only on the portion paid by the employer.

What employee money is for WC is being funneled through a cafeteria plan?

[GBurns]

I tunderstood the question that Carolyn meant to ask as being ...whether the WC premium is based on the Gross Salary/Compensation before any pre-tax reductions for Cafeteria Plans etc. or on the net after such reductions.

[KIP KRAUS]

Ah Ha. Makes sense to me G.

[Guest Carolynn]

Thanks for the lively conversation, GBurns posed the question better than I did! I guess I still don't have a ready resource for state by state breakdown, but I appreciate your ideas. Many thanks.

[SLuskin]

I know that in Florida, workers comp premiums are calculated on the amount before the Section 125 pretax payroll deductions.

Does anybody know how it is treated if the employer makes "seed contributions" to the plan, or if flex dollars are used? Thanks.

[Guest AHayhow]

I know that in Kentucky, Ohio and Indiana (according to Section 2 of the NCCI book), employer dollars provided within a section 125 plan are not included in the calculation of worker's compensation premiums (nor general liability premiums), but that employee contributions are.

The attorney and the worker's comp bureau rep I talked to said the best way to determine what amounts must be included in determining worker's compensation premiums is to look at IRS Form 941 requirements.