[UCRDBR] Lincoln Financial - 2024 Disability Benefit Taxation

[Departmental Benefits Representatives]

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April 15, 2024

To:
Department Benefits Representatives (DBRs)
From:
Central HR Benefits Office on behalf of UC Office of the President
Re:
Lincoln Financial - 2024 Disability Benefit Taxation

DBRs, please share this information via your internal listserv.

The UC Disability Program offers both employer and employee-paid benefit plans though Lincoln Financial Group (LFG).  Paid benefits 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 after payroll tax and benefits are generally not taxable.

The Basic and Voluntary Short-Term Disability (VSTD) plans provide benefits for a maximum of 6 months and are paid concurrently if an employee is enrolled in VSTD.  In this instance, Lincoln Financial Group 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 2024, 15.78% of combined Basic and VSTD disability benefit payments are taxable.  This is a slight reduction from 2023.

Taxability of Disability Benefits
Plan
2023
2024
Basic Disability only
100%
100%
Voluntary Short-Term Disability only
0%
0%
Basic and Voluntary Short-Term Disability (when combined into consolidated payments)
16.84%
15.78%
Voluntary Long-Term Disability only
0%
0%

For employee questions about taxes withheld from their disability benefit payments, please advise employees to contact their LFG case manager by phone or email.

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