Processing Third Party Sick Pay

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Processing Third Party Sick Pay

On a monthly or quarterly basis an employer’s insurance provider issues a report indicating the STD/LTD benefit amounts that are paid out to their employees. These payments should be entered into the HCM payroll system as soon as they are received so that they are posted to the correct tax quarter. You may also owe employer taxes to state agencies, which are deposited on your behalf after the payments are posted in HCM.

Important Year-End Note: if PlanSource W2’s include 3rd Party Sick Pay (3PSP) data, entries MUST be made no later than the final pay date of each year. If your employees have received benefit payments from long or short-term disability plans through a carrier such as AFLAC,  be sure to obtain this information from the appropriate third party provider as soon as possible. While most carriers mail these reports in January, they are also available on the provider website on or prior to 12/31.

Please contact your broker or carrier to find out how you can access this information prior to 12/31. If these payments are not submitted prior to 12/31 of the reporting year, a W2-C for the employee will be required. Before reporting third party sick pay, determine the type of sick pay being reported and the percentage of gross that is taxable. Some insurers will separate the Social Security and Medicare amounts on their statement, while others will list the combined amounts under FICA Withheld. Be sure to include all Federal and/or State Withholding reported on the statement.

Please see the attached document to assist in recording Third Party Sick Pay in the UKG Payroll System. Please contact the HCM Service Team if you have any additional questions!

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