While receiving benefits from disability insurance can be a form of relief for many, there are still some questions that persist. One of the most common questions that arises is whether or not disability insurance benefits are considered taxable.
First, you should know that there is no template answer. Situations differ, so the taxable income may also differ.
At the end of the day, it’s dependent on the type of benefits you’re receiving, the manner in which the premiums are paid, and whether or not premiums were paid by you or your employer. Here are some of the things you need to consider.
In an Employer-Sponsored Group Disability Insurance Policy
If you are involved in a group disability insurance policy through your work, there are various circumstances that must be factored in. For example, if you paid the premiums for the insurance policy using income received after taxes, the benefits come to you tax free.
If your company pays for the entire premium, the benefits may be considered taxable. Tax liability may be split in situations where both you and your employer pay the premium of the policy under a group disability insurance program.
Individual Disability Insurance Plans
When you purchase disability insurance through your own policy, using your own after-tax dollars, the benefits you receive will be tax free. However, it’s important to know that these premiums are not tax deductible such as medical expenses.
At Dabdoub Law Firm, we know that individuals have plenty of questions regarding disability insurance, their rights, and what kind of benefits they may receive. We aim to help ease some of these concerns and answer questions our potential clients may have.
If you’re facing a disability insurance claim denial or you need help navigating the legal process, see how our disability insurance attorneys may be able to help you. Trust that we’re here for you every step of the way.
Contact us today at (855) 720-9806 to speak with an attorney.