Premium Payments for Long-Term Disability Insurance

If long-term disability premiums are paid out of after-tax earnings, any benefits received are exempt from federal income tax.

If the premiums are paid by the congregation the payments will be treated as taxable income. Congregations may pay the premium and add the cost to the W-2 as imputed income. Proof of premium payment and tax status is required by the insurer during the claim approval process.