No, this isn't a bug, this is a legitimate tax.
For group-term life insurance coverage provided to former employees, former employees have to pay the employee part of social security and Medicare taxes on the taxable cost of group-term life insurance over $50,000 on Form 1040 or 1040-SR.
The employer is not required to collect those taxes. However, the employer must report the uncollected social security tax with code M in box 12 of Form W-2.
Please see Group-term life insurance in the General Instructions for Forms W-2 and W-3 for more information.
