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Third-party sick pay - what employers should know
In this publication, we provide answers to the 10 most frequently asked questions about the taxation and reporting of third-party sick pay.
Third-party sick pay describes payments received by employees through private insurers or state disability insurance funds for wage continuation during a qualified non-work-related disability-related leave. Some businesses fund their own disability leave benefits and may outsource administration of the plan to a third party.
Regardless of who bears the insurance risk for disability leave benefits, special tax and reporting requirements apply. Additionally, employers and third-party payers share responsibility for taxing and reporting disability leave benefits, and it is precisely this shared obligation that frequently leads to confusion and reporting errors.
In this publication we provide answers to the 10 most frequently asked questions about the taxation and reporting of third-party sick pay.