[UCRDBR] Lincoln Financial 2023 Disability Benefit Taxation

[Departmental Benefits Representatives]

[cid:image001.png at 01D98253.E929FDC0]


May 9, 2023

To:
Department Benefits Representatives
From:
Central HR Benefits Office on behalf of UC Office of the President
Re:
Lincoln Financial - 2023 Disability Benefit Taxation


DBRs, please share this very important information via your department listserv.

The UC Disability Program offers both employer and employee-paid benefit plans.  Whether or not benefits paid from these plans are subject to income tax depends on who pays the insurance premiums.

*       Basic Disability - UC pays premiums and benefits are generally taxable.

*       Voluntary Short- and Long-Term Disability - Employees pay premiums on an after-tax basis and benefits are generally not taxable.

The Basic and Voluntary Short-Term Disability (VSTD) plans both provide benefits for a maximum of 6 months and are usually paid concurrently if an employee is enrolled in VSTD.  When this happens, Lincoln Financial Group (LFG) consolidates payments from both plans into one check. Each year LFG follows IRS guidelines to determine the percentage of disability benefits subject to taxability.  For 2023, 16.84% of combined Basic and VSTD disability benefit payments are taxable.  This is a slight reduction from 2022.

Taxability of Disability Benefits
Plan
2022
2023
Basic Disability only
100%
100%
Voluntary Short-Term Disability only
0%
0%
Basic and Voluntary Short-Term Disability (when combined into consolidated payments)
17.33%
16.84%
Voluntary Long-Term Disability only
0%
0%

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <https://lists.ucr.edu/pipermail/ucrdbr/attachments/20230509/6dd03ce2/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 24712 bytes
Desc: image001.png
URL: <https://lists.ucr.edu/pipermail/ucrdbr/attachments/20230509/6dd03ce2/attachment.png>