Are Disability Benefits Taxable?


For people living with disability and who are unable to work, disability insurance benefits provide comfort and security. The funds they receive help them focus on getting better without having to worry about living expenses and potential costs of rehabilitation.

But are your disability benefits taxable? The short answer is — it depends.

Depending on the source of your long-term disability benefits and the language of the contract — for example a company’s group insurance plan or your own private individual disability plan — the rules will vary.

When it’s taxable and When it’s not

When referring to a group insurance LTD plan, it comes down to who pays the premium. If an employer pays 100% of the premiums on an insurance policy, the benefits received when disabled are taxable to the employee.

If, however, 100% of the premiums under a plan are covered by the employee, then the benefits are considered non-taxable. If the group premiums are shared between you and your employer, then it is important to look to the language of the policy to determine whether the benefit is taxable.

Under a private insurance plan, the benefits are typically non-taxable, though an individual can’t claim the disability insurance premiums.

We’re here to help

Determining whether or not your benefits are taxable can be complex and confusing. If you have any questions about your disability insurance policy, or have been denied benefits you deserve under your LTD insurance plans, then reach out to Howie, Sacks & Henry LLP.

Our team of lawyers has handled many disability and critical illness insurance disputes. If your claim was denied, we can evaluate the appropriateness of the insurance company’s decision and take the necessary action, fighting for the benefits you deserve and fighting for your health and wellbeing.

For more information or to speak about a denial of short- or long-term disability benefits, please contact Brad Moscato, Past Chair of the LTD Section, Ontario Trial Lawyers Association, at 416-646-7655 or

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