Can I Write Off Disability Insurance Premiums?

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   Christopher Lawrence

   Insurance Broker | Financial Consultant, Lawrence Insurance Consulting, Southern New Jersey

   The answer to your question is no and yes but still pretty much no. The most effective way to structure a DI policy is after through a funding arangement that uses after tax dollars to fund the policies premiums. The reasoning is that one is investing in a DI policy to reduce the financial impact that one occurs due to either a short-term disability, a long-term disability or some merging of the two. The DI policy will be subject to state and federal taxes, either one pays with "post-tax" dollars which have been subject to FICA/FUTA taxes and have the benefits payed without without extra tax concerns (however the benefits will be reported and taxed as income), or one can structure DI that are offered as a employee benefit with pre-tax funding but with increased liabilities to ones benefits (reporting is the same). The opportunity cost of delaying that additional tax obligation does not carry with it enough benefits to offset the disadvantages. If your question is simply can you include DI premiums as qualified medical expenses that would be put them into IRC Section 213 "tax-advantaged" status, no you can not.

   Answered on July 19, 2013

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