Disability Benefits
(5 of 6)
Disability Benefits
If your disability benefit payments come from a policy that you purchased, those funds are tax-free. However, if your payments are from an employer-funded policy, they are taxable, meaning you’ll have less money to pay your bills.
Things To Know
- If your disability payments are from an employer-funded policy, they are taxable.
- With a return-to-work provision, you can collect benefits even if you are back at work.
When you return to work
Policies differ on whether you can return to work part-time and still receive benefits because you haven’t returned to work full-time. By selecting a residual or partial disability waiver, you can collect a part-time salary and partial disability benefits; without such a rider, you won’t qualify for additional disability benefits should you return to work part-time.
Under a return-to-work disability insurance provision, you will still be able to collect medical benefits for your disability even if you are back at work. Otherwise, your insurer could take the position that your return to work meant that you were fully recovered from your disability and didn’t need further benefits.