You may or may not have to pay taxes on the benefits you collects from a disability claim. It depends on how your physician disability insurance premiums are paid. This 3-minute video explains this in more detail, and shares if your premiums are deductible.
Earlier this week, in Part 1 of our 2-part series, I explained that if your employer pays premiums on a long term physician disability income policy with funds not included in your income checks, your benefit amounts (including lump sum settlements) will be taxed during your disability claim. While they do tend to be an attractive option due to the savings you receive by paying with pretax income, the reality is, in the long run, you’re not saving much, if anything.
Here’s an example.
Paying your physician disability insurance premiums with pretax income may be an attractive option due to the immediate savings you receive. But are you really saving money in the long-run? In this two-part post we’ll explain whether pretax or post-tax dollars provide a greater benefit.
Is doctor disability insurance taxable? If so, what does that mean for me? Why pay with pre-tax dollars?