Short answer: Yes, generally: the imputed income rule follows former employees and retirees. The employer reports it, and the former employee pays their share of Social Security and Medicare tax with their own return. Coverage on a former employee who left because of disability is an exception.
When an employer keeps paying for group term life over $50,000 after an employee separates, including a retiree, the cost over $50,000 is still figured from the IRS table. The employer does not collect the former employee’s share of Social Security and Medicare tax; the former employee pays it with their tax return. The employer still pays the employer share and reports the uncollected amounts in box 12 of the W-2 with codes M and N.
The tax code carves out one case: the imputed income rule does not apply to the cost of group term life on a former employee who terminated employment and is disabled, within the meaning of the tax code’s disability definition.
This matters when an employer offers retiree life or continues coverage under a waiver of premium; the payroll or benefits team should know the reporting does not stop at termination.