Page 124 - Group Insurance and Retirement Benefit IC 83 E- Book

for employees, but tax rules make it more advantageous for employees to pay their own

premiums. Remember that DI benefit payments are not taxable income to disabled
employees who paid the premiums themselves. Conversely, any part of the benefit

attributable to employer premium contributions is taxed as current income.

Many employers today pay the premiums for short-term disability (STD) benefits (often
through salary continuation plans funded by DI insurance) and require employee

contributions for long-term disability (LTD). STD benefits are generally defined as those

extending up to 52 weeks (although 13 and 26 weeks are more common) and LTD
benefits are those payable for longer than one year. It is also becoming more common to

require employees who want to participate to pay 100% of the premiums for LTD plans.

When employee contributions are mandatory, the employer must provide a way to collect
the premiums and pay the insurance company, usually by payroll deduction.

Provisions for STD and LTD

When a group plan provides both short-term and long-term disability benefits, different

provisions may apply to each. For example, the elimination period for STD benefits

might be as short as seven or 14 days, compared to the typical 90-day elimination period
for LTD. If the employee becomes eligible for STD benefits and later for LTD benefits,

these must be carefully coordinated to avoid over insuring.

A dual definition of total disability is common in-group DI policies. For both STD and
LTD benefits, the "own occupation" definition is typically used initially. Then, if

disability continues beyond a stipulated period, the disabled person must qualify under

the "any occupation" definition.

Other Group Provisions

Group DI policies usually cover only non occupational injury or sickness, specifically
stating that benefits provided by workers compensation or similar disability plans will not

be duplicated or replaced by the group policy.