Benefits from an individual or group disability insurance policy are received tax-free by the claimant if:

Question: Benefits from an individual or group disability insurance policy are received tax-free by the claimant if:

Answer options:

• The employer and employee share the premium costs.
• The employer pays 100% of the premiums.
• The employer pays 50% of the premiums. ✅ The employee pays 100% of the premiums.

Correct answer: The employee pays 100% of the premiums.

Explanation: Group disability benefits are taxable to the employee if the employer pays any part of the premium. If the employee pays 100% of the premium with after-tax dollars, the benefit is tax-free.