Social Security & Medicare Withholding for a "Special Payment" (i.e., not regular wages)

[NYCtaxAvoider]

Employees of a company work under a collective bargaining agreement. Part of the agreement states that if the cost of providing health insurance for the employees achieves a net savings for the company of a at least a certain amount over the previous year's cost (because of plan design changes, etc.), then that savings will be distributed by the employer to the employees in a special, one-time payment.

Is a payment of that nature subject to Social Security and Medicare tax?

[rjs]

Any payment from an employer to an employee is treated as wages and is subject to Social Security and Medicare taxes. It doesn't matter what the reason for the payment is. The payment should be included in the wages in box 1 of your W-2 at the end of the year.