Pill Button

Step1:

Create a new image  800 x 600. Change the background color to white. Create a new Layer, Layer > New > Layer Or (Shift+Ctrl+N) Click on the rounded Rectangle and add the setting below.

Now draw a Rounded rectangle W:94 x H:18. should look something like the image below.

Hold Ctrl and click on the button layer to select it. Now click on the Rectangular Marquee and  Subtract from Selection Cutout about 90% of the selection as shown below.

Create a new Layer, Layer > New > Layer Or (Shift+Ctrl+N). And fill the selection with red. Your button should now look like the image below.

Now right click on the layer and click Blending Options and add the setting below.

If you add the setting your button should look like the image below. Don't worry about the color we will change that at the end.

Step2:

Hold Ctrl and click on the layer with the button. Should be the layer below the layer we just added the Blending Option to. Holding Ctrl and Clicking on the button should select it like the image below shows.

Now click on the Rectangular Marquee and  Subtract from Selection . Subtract the area around the button shown below, leaving the other part of the button still selected.

Create a new Layer, Layer > New > Layer Or (Shift+Ctrl+N). And fill the selection with red. Your button should now look like the image below.

Now right click on the layer and click Blending Options and add the setting below.

With that setting added your button should now look like my image below.

Step3:

We can change the color of the button head, click to select it

Click on Image > Adjustments > Hue/Saturation or (Ctrl+U)

Play around with the setting and you can come up will some nice colors.

That is it. Hope it came out to what you wanted.