Employer pays premiums to a third party insurer to pay short term disability to employees. Third party makes the payments to the ees. Third party sends quarterly statements to the employer detailing what benefits were paid and the FICA withheld. Employer adjusts W-2 at year end to reflect the amount paid and the taxes withheld.

Can these payments be excluded from plan compensation without doing the compensation ratio test?

Welfare benefits are excluded under the safe harbor exclusions (reimbursements, other expense allowances, fringe benefits, moving expenses, deferred comp and welfare benefits). STD is a welfare benefit so it is excluded from comp if you have safe harbor exclusions.

I have an additional question. I have a plan with safe harbor exclusions but the employer wants to include std, FMLA, and maternity pay in comp. Will that require comp testing?