New York State Disability Insurance Needs

If I purchase a disability income policy from a New York state disability insurance provider, can I take a tax deduction for the premiums?
If you purchase the New York state disability insurance policy on your own, the Internal Revenue Service will not allow you to deduct the annual premiums. However, if you eventually become disabled and begin to collect benefits, the money you receive from such a policy will not be subject to federal income taxes. If you purchase New York state disability insurance through your employer, you may be able to have the premiums deducted from your paycheck on a pre-tax basis through a cafeteria plan. If this option is available, it’s usually wise to take it. By using pre-tax dollars, you will lower the earnings your employer will report to the IRS and thus lower the taxes you must pay; however any benefits you receive will be taxable.

Can New York state disability premiums be deducted from my paycheck and paid with pre-tax dollars?
If you purchase New York state disability insurance through an employer’s group plan or individually, you may be able to have the premiums deducted from your regular paycheck using pre-tax dollars if your employer offers a Section 125 cafeteria plan. If this option is available, take advantage of it. By using pre-tax dollars, you will reduce the amount of income that your employer reports to the Internal Revenue Service. In turn, you won’t owe as much in taxes. However, should you become disabled the benefit will be taxable.

How is New York state disability insurance priced?
Your New York state disability insurance plan can be as inexpensive, or as expensive as you want it to be based on the type of plan you choose. Discuss this with the disability insurance professional who contacts you after you fill out our quote form. As a rule of thumb, you should expect to pay approximately 4% of your income for a quality disability insurance plan. There are several factors that set your price some of these are:

• benefit period
• age
• benefit amount
• elimination period
• occupational class

How much coverage can I expect from a policy?
Usually the policy you take out from a licensed, New York state disability insurance provider will cover 50-65% of your earned income should you become ill or hurt.

What income is replaceable by a insurance policy provided by a certified, New York state disability insurance provider?
Earned income is covered by disability insurance. Unearned income is not. Unearned income is any income that would continue even if you were disabled such as a rental property income, dividends, retirement income from pension, and so on.

What is a partial disability benefit?
A proportionate benefit helps compensate for a loss of earned income caused by the insured's partial disability. Some of the features of this benefit include:

• If you have at least an 80% loss of earned income, the proportionate benefit amount payable will be 100% of the full benefit.
• Other cash benefits.
• Earned income prior to disability is considered in determining the appropriate (proportionate) benefit.
• Loss of earned income is not required prior to the beginning date of benefits.