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That is why with group insurance plans the premium split is structured so that the employee pays the Long Term Disability (LTD) portion of the premium. This is done to keep the benefit tax free.
Plans can be structured to provide a benefit to employees with the company paying the premium on the policies and deducting it as an expense. Certain rules need to be followed. Here is an overview: Company pays premium for coverage, gets the deduction, employee does not pay tax on the premium "benefit", but any disability benefit is taxable. In order to offset the income tax, the amount of coverage the employee is permitted to apply for is increased.
If you have any further questions, or feel that I could be of assistance, please do not hesitate to contact me.
However, if you purchase disability insurance and pay the premiums with your after tax dollars then your benefit proceeds after claim are tax free to you.
It is the old scenario of paying taxes on the seed or the harvest.