Select Page

Long Term Disability Insurance and Taxes

If you have Long Term Disability insurance, you may be wondering how it will affect your taxes. Depending on how your plan is paid for, you may need to pay taxes on any benefits you have received.

Are Disability Benefits taxable?

Taxes can be confusing. If you need additional guidance, a tax professional may be able to help you.

Are benefits taxable?

It depends on who paid the premiums for the policy and whether post- or pre- taxed incomed was used. If you paid for the entire cost of the policy (with post-tax dollars), then the benefits are generally not considered taxable. You pay the premium on your own, and the benefits are yours tax-free. However, benefits often do count as income if an employer paid for the plan you are receiving benefits through, unless the cost of the premium is reported as income to you.


Sometimes a cafeteria plan will allow you a choice to purchase coverage with pre or post tax dollars. If you choose to pay your premiums with pre-tax dollars you will save money in the short-term on premiums, but if you need your benefits they will be taxed. If you are a young, healthy individual in a low-risk profession, it may make sense to choose this option. However, if you think there is a good chance you may need benefits, you will want to use after-tax dollars in order to prevent your benefits from being taxed. Keep in mind that disability insurance pay outs are typically significantly less than salary. If something unfortunate happens and you do need benefits, you will want to be able to take home the full benefit amount.
If your benefits are taxable, your insurer is required to provide information regarding the dollar amount of benefits paid and taxes automatically withheld.

Who Paid the Premium? Will you owe tax on the benefits?
You (Post-tax dollars) No.
Employer Yes, Benefits are considered income.
25% You (Post-Tax), 75% Employer You will owe tax on 75% of benefits.
You (Pre-tax dollars) Yes, you received a deduction for the premium payment.
Taxes can be confusing. If you need additional guidance, a tax professional will be able to help you.

Long Term Disability Lawyers

If you have a Long Term Disability insurance policy, it should be there for you when you need it. Long Term Disability insurance providers often deny legitimate claims. If you have a Long Term Disability insurance policy, and have been denied coverage, the attorneys at Bemis, Roach and Reed can help. Contact us today for a free consultation.
Call 512-454-4000 and get help NOW.

5 star disability lawyers

"Words can not truly express the gratitude that I feel toward Mr. Lonnie Roach and his professional team. I give them an A+++. Very compassionate and prompt. Their priorities are first and foremost helping you succeed at your case. When you feel helpless, feeling like someone is on your side can mean the world to you. Thank you for working for the people."
-Amy K.


Top SS disability lawyer
top disability attorney

Blog Feed

Austin Homeless

Does Muscular Dystrophy Qualify for SS Disability Benefits?

The Social Security Administration recognizes muscular dystrophy as an impairment in its Blue Book under Section 11. However you must meet both the work and medical requirements.

ltd assistance denied

best disability lawyer

board certified attorneys

Your Free Initial Consultation

At Bemis, Roach and Reed, if we can't help you, we will try to find the right attorneys for you.

We offer each of our prospective clients a free no obligation one hour phone or office consultation to see if we can help you and if you are comfortable with us. We know how difficult a time like this can be and how hard the decisions are. If we can be of assistance to you and help you find a solution to your issue we will even if that means referring you to another attorney.

Or simply call 512-454-4000
to schedule your
Free Consultation

Let's get you Started:

If you could provide us with some basic information about your claim we will get right back with you with a free case evaluation and schedule your Free Consultation Today.

Fields marked with an * are required

Call now for a FREE initial consultation
(512) 454-4000