The PA UC Law (Law) under Section 4(x), defines "wages" as "... all remuneration (including the cash value of mediums of payment other than cash) ... paid by an employer to an individual with respect to his employment ..." The term "wages" as defined within the Law has an all-inclusive interpretation, in that all remuneration is considered wages unless explicitly exempted under the statute.   

Under the PA UC Law, a qualified Section 125 plan (Cafeteria Plan, Flexible Spending Plans) financed by employees using "pre-tax" dollars, would constitute covered wages for PA UC tax purposes. As such, the amounts by which the employees' gross wages are reduced must be included on Form UC-2/2A, Employer's Report for Unemployment Compensation, and must be included when calculating both employer and employee contributions for PA UC tax purposes. 

However, there are certain types of non-cash benefits financed by employer payments that are excluded in the UC Law from the definition of "wages." These would include medical or hospital insurance as explained under Section 4(x)(2)(iii) of the UC Law and life insurance as explained under Section 4(x)(2)(iv). Accordingly these amounts would not be included when calculating employer and employee contributions.   

Further it should be noted that regardless of any exclusion provision in the Law, if a payment is covered under the Federal Unemployment Tax Act (FUTA), it is also covered for PA UC tax purposes by virtue of the "catch-all" clause in Section 4(x)(6) of our Law.