Wisconsin Employee Life Insurance Laws: What Employers and Employees Need to Know

Key Differences in Wisconsin

Wisconsin's employee life insurance statutes differ from the federal Employee Retirement Income Security Act (ERISA) in several ways. The state requires that group life policies be offered on a nondiscriminatory basis and that employers disclose eligibility and cost details to all eligible workers. Unlike ERISA, Wisconsin does not impose a minimum coverage amount, but employers must still ensure that benefits are not used as a disguised compensation scheme.

Eligibility and Discrimination Rules

Under Wisconsin law, any employee who meets the employer's basic eligibility criteria—such as length of service or job classification—must receive an offer to enroll. Employers cannot deny coverage or increase premiums based on an employee's health status or gender. The state's anti‑discrimination provision applies to both voluntary and mandatory coverage plans.

Coverage Limits and Benefit Caps

Wisconsin imposes a maximum group coverage limit of $1,000,000 per employee, with no requirement for a minimum benefit. Employers can structure plans with varying death benefit amounts, but the aggregate benefit cannot exceed the statutory cap. If an employee's policy exceeds this limit, the excess portion is considered taxable income.

Cost Sharing and Premium Disclosure

Employers may share the cost of premiums with employees, but the total employee contribution cannot exceed 25% of the premium. Wisconsin mandates a clear, written disclosure of the cost‑sharing arrangement, including the exact dollar amount and the employee's portion of any deductible. Failure to provide this notice can trigger penalties.

Tax Implications and Reporting Requirements

Qualified group life insurance premiums paid by an employer are generally excluded from an employee's taxable wages up to the $50,000 coverage threshold. However, if the coverage exceeds $50,000, the excess is treated as taxable income. Employers must report this on Form W‑2, Box 12, using code "C." Additionally, Wisconsin requires annual reporting of group insurance plans to the Department of Health Services.

Compliance Checklist for Employers

• Offer coverage to all eligible employees.
• Disclose eligibility, costs, and coverage limits in writing.
• Limit employee premium contributions to 25% of total cost.
• Ensure coverage does not exceed $1,000,000 per employee.
• Report taxable benefits on W‑2 and file required state forms.