In an employer-sponsored contributory group disability income plan where the employer pays 60% and each employee pays 40%, at what percent are income benefits taxed to the employee?

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Study for the Louisiana Series 103 – Life, Health, and Accident or Sickness Insurance Exam. Familiarize yourself with key concepts through engaging questions and explanations. Prepare effectively for your exam!

Multiple Choice

In an employer-sponsored contributory group disability income plan where the employer pays 60% and each employee pays 40%, at what percent are income benefits taxed to the employee?

In disability income plans, how premiums are paid determines how benefits are taxed. If premiums are paid with pre-tax dollars by the employer, the benefits you receive are taxable to you; if premiums are paid with after-tax dollars by the employee, the benefits are generally tax-free. Here, the employer funds 60% of the premium and the employee funds 40%. That means 60% of the benefits are taxable to you as ordinary income (the portion tied to the employer’s pre-tax contributions), while the 40% you paid with after-tax dollars would typically be tax-free.

In an employer-sponsored contributory group disability income plan where the employer pays 60% and each employee pays 40%, at what percent are income benefits taxed to the employee?

Study for the Louisiana Series 103 – Life, Health, and Accident or Sickness Insurance Exam. Familiarize yourself with key concepts through engaging questions and explanations. Prepare effectively for your exam!

In an employer-sponsored contributory group disability income plan where the employer pays 60% and each employee pays 40%, at what percent are income benefits taxed to the employee?

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