Insurance Rules

Disability Benefits Don’t have to be ‘Taxing’

Blog | Group Insurance | Insurance Rules

When your firm offers employee disability benefits, it’s worth thinking about the tax consequences. The choices you make will determine whether employees will have to pay income tax on disability benefit payments they receive from your group plan. If you, the employer, pay any part of a disability premium, the employee will be required to pay tax on benefits received. It doesn’t matter whether your firm pays 100% of the premium or splits the premium payment with employees; an employee who receives disability benefits will owe income tax on those benefits.
As a result, most firms arrange to have employees pay the entire disability premium. If your firm still decides to pay some, or all, of the premium, make sure your employees understand the tax
consequences of any disability benefits they receive. Though insurance companies may deduct tax from disability payments, it may not cover the entire tax liability.

The Chambers Plan online administration utility includes an Employee Deduction Calculator that easily manages cost sharing arrangements with employees that can minimize any tax liability on disability payments.
Setting up your benefit plan doesn’t have to be complicated, but it’s definitely worthwhile to work with a competent group insurance advisor who’s familiar with the possible pitfalls. And,
once you’ve chosen your plan’s benefits, a good employee communication program will ensure your staff know about the valuable coverages available to them.


Benefit Facts presents information to help you manage your employee benefits. Brought to you by your Chambers of Commerce Group Insurance Plan® advisor, representing Canada’s premier group plan for small and medium sized business.

Who Pays? What to do when both spouses have coverage!

Blog | Group Insurance | Insurance Rules

Claims for Dependent Children
When both parents have plans and their children are covered under both as
dependents, the plan of the parent with the earlier birth date in the calendar
year pays first.

Example 1:
• Father’s birthday – October 11
• Mother’s birthday – September 21
Therefore – Mother’s plan pays first – Mother’s birthdate comes before Father’s in
the calendar year.
If both parents have the same birth date, the plan paying first is based on the
parent’s given name that occurs first in the alphabet.

Example 2:
• Mom’s given name is Jane
• Dad’s given name is Stephen
Therefore – Jane’s plan pays first – the name Jane comes first alphabetically.
In cases of Single Custody i.e., when one parent has custody of the child(ren),
the plan of the parent with whom the child resides, i.e., the plan of the parent with
custody, pays first.
The plan of the spouse of the parent with custody pays second.
The plan of the parent not having custody pays third.

Example 3:
A child lives with mother and her new spouse.
Therefore – Mother’s plan pays first.
Mother’s spouse’s plan pays second.
Father’s plan pays third.
In cases of Joint Custody i.e., when both parents have plans and their children are
covered under both as dependents, the plan of the parent with the earlier birth date
in the calendar year pays first. (See Example 1 on the previous page.)

This information comes from CHLIA Click here for more informaiton