Purpose
- To explain the processing of gross, Social Security, and Medicare wage adjustments when the State Insurance Fund (SIF) notifies OSC of Workers' Compensation awards that are credited to New York State as reimbursement for wages paid to employees by the State in the current year.
- To explain the processing of current year Social Security and Medicare refunds resulting from adjustments made to employees' Social Security and Medicare wages.
Affected Employees
Employees who received Workers' Compensation awards in the current year for periods during which the employees were previously paid wages by the State.
Background
New York State employees participate in one of several Workers' Compensation benefit programs, as determined by bargaining unit and the date of the injury or illness. In general, regardless of the Workers' Compensation program an employee is covered under, the Workers' Compensation Board (WCB) will direct SIF to:
Pay the statutory benefit (full or partial), directly to the employee when either of the following conditions exist:
The employee received no wages from the State for work-related absences because the employee was on a leave of absence without pay
OR
The employee received wages from the State for work-related absences, but the wages received were less than the amount of the statutory benefit (e.g. employee was on sick leave with pay). In this instance, the WCB would direct SIF to pay the employee directly for the difference between the wages the employee received from the State and the amount of the statutory benefit. [Note: In this case, SIF would also credit the State for the amount of the wages actually paid to the employee by the State.]
- Credit the State with reimbursement for wages paid when:
The employee received wages from the State during work-related absences. The wages were received because the employee charged leave credits, was on sick leave with pay, or was covered under a program, such as the Security Units Medical Evaluation Program, which grants an employee Workers Compensation leave with pay without charge to leave credits.
OSC Actions
Wage Adjustment Procedures:
The Workers' Compensation statutory benefit (maximum of $400 weekly) is not subject to federal, State, local, or Social Security and Medicare taxes. When a Workers' Compensation award is made for a disability period that occurred in the current calendar year and the employee was paid by the State for all or part of that disability period, OSC will reduce the employee's year-to-date taxable gross, Social Security, and Medicare wages for the current calendar year by the amount of the Workers' Compensation award credited to the State. The employee's W-2 form will reflect this reduction in wages.
The employee's wages for current calendar year disability periods will be adjusted following a review of the C8EMP/INFO forms received by OSC each month from SIF. These forms identify the periods of disability for which the award was credited, either in full or in part, to the State. If the C8EMP/INFO form identifies a State credit for a disability period that falls within the current calendar year, OSC will adjust the employees current year-to-date taxable gross, Social Security, and Medicare wages, and will process a refund of the Social Security and Medicare taxes previously withheld, based on the adjusted wages.
The gross, Social Security and Medicare wage adjustments for disability periods that fall within the current calendar year will be adjusted using the Earns Code WCE (Workers' Compensation Excluded) on the Time Entry panel using a negative adjustment amount and the corresponding disability begin and end dates.
Refund Procedures:
Following completion of the wage adjustment procedures noted above, OSC will :
- Automatically refund the Social Security and Medicare taxes to the employee, in a separate check or advice, based on the amount of the WCE wage adjustment.
- Provide the agencies with a list of employees who received Social Security and Medicare refunds. This list will contain all of the information necessary to complete the attached sample communication to employees.
Note: Although the employee's taxable year-to-date gross wage will be reduced, refunds of federal, State, and local income taxes will not be processed by OSC. Affected employees' taxable wages will be reduced on their W-2, resulting in a reduction in their tax liability as determined on the Federal and State tax returns.
Agency Actions
- Agencies should notify employees identified on the OSC- provided list of the adjustments made to their calendar year-to-date gross, Social Security and Medicare wages and the refund of Social Security and Medicare taxes being processed as a separate check or advice. A sample notification letter is attached to assist with this communication.
Questions
Questions regarding this bulletin may be directed to the Workers' Compensation mailbox.