What is Third Party Sick Pay?

Third party sick pay refers to benefit payments from an insurance company that provide funds to employees in place of lost wages caused by an illness or non-work related injury. You may receive third party sick pay notices throughout the year from third party administrators, or receive a summary sheet at year-end that lists all sick and disability payments made to your employees throughout the year, if you have employees out on disability. 

Payments received by the disability carrier are subject to employee FICA and must be reflected on an employee's W-2.

For more information on how to process these payments, read Third Party Sick Pay.