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Open Enrollment: LTD Tax Option Form

Open Enrollment: LTD Tax Option Form - Departments & Programs, UW Health, Benefits, UW Health Open Enrollment, UWMF Open Enrollment, Long-Term Disability (LTD), Resources


Revised 9/2007
Long Term Disability (LTD) Benefit
Tax Option Enrollment Form
Long Term Disability (LTD) Insurance is provided to UWMF employees with a minimum of 0.75 FTE (30 hours per week or
more) and UWMF mid-level providers with a minimum of 0.50 FTE (20 hours per week or more). Eligibility is the first of the
month following one month of employment. UWMF pays the premium for the LTD benefit; however, the employee must pay
the tax on this benefit in one of two ways:
Post-Tax Option
 UWMF will reimburse the employee for the cost of the premium in addition to their regular compensation. The pay code LTDAT will
appear on his/her paycheck as income, equal to the amount of the disability insurance premium. That amount is then subtracted from
his/her paycheck. This process is simply to calculate the federal tax on the premium.
 The amount of the premium is based on the employee’s prior year W2 wages. If newly eligible for the plan, the premium is based on the
employee’s annualized current rate of pay.
 The tax impact on the employee will be based on the LTD premium that UWMF is compensating the employee.
 If the employee is disabled for more than 90 consecutive days and is approved to collect LTD benefits, he/she will not have income tax
deducted from his/her disability check. The disability check will not be income to the employee and therefore does not have to be
claimed on the employee’s tax return at year-end.
Pre-Tax Option
 UWMF will pay the LTD premium on behalf of the employee. The pay code LTDBT will appear on his/her paycheck as an employer paid
benefit.
 The amount of the premium is based on the employee’s prior year W2 wages. If newly eligible for the plan, the premium is based on the
employee’s annualized current rate of pay.
 If the employee is ever unable to work due to a disability and is approved to receive LTD benefits, the disability benefit would be taxable
income. This is because the employee chose not to pay the taxes through payroll deduction. The employee would have to claim that
money as taxable income on their annual tax return and pay taxes on it at the end of the year.
The employee may choose whichever option best suits their needs. However, UWMF strongly encourages employees to elect
the Post-Tax Option. There may be less of a financial strain to an employee if he/she chooses to pay the tax on the benefit
while working and receiving a steady paycheck rather than pay the tax through his/her annual tax return.
Keep in mind that LTD Insurance is similar to car insurance – you don’t expect to use your car insurance, but it’s there if you
need it. The same goes for LTD – you don’t expect to use your LTD benefit, but it is there if you need it. If you elect the Post-
Tax Option, but do not use your LTD benefit, you do not get the taxes paid on the benefit back. Again, this is just like car
insurance. If you don’t make a claim against your car insurance, you won’t get your premiums back.
Changes can only be made to the employee’s election during the annual open enrollment period.
Please choose the option you prefer below:
LTD Post-Tax Option: I elect to participate in the Post-Tax Option for the Long Term Disability benefit. I
understand that UWMF will reimburse me for the premium, and that taxes will be calculated on that premium. I also
understand that if I were to claim LTD and receive disability payments, I will not have to pay income tax on the
disability income.
LTD Pre-Tax Option: I elect to participate in the Pre-Tax Option for the Long Term Disability benefit. I understand
that UWMF will pay for the LTD premium on a pre-tax basis. I will not see a premium deduction, nor the added
compensation on my paycheck related to LTD. I also understand that if I were to claim LTD and receive disability
payments, I will have to claim the disability income as taxable income on my annual tax return.
_______________
Employee Name (please print) Employee ID
_______________
Employee Signature Date
Open Enrollment 2018
Return completed forms to Human Resources by October 27 deadline:
Fax: 608-263-5778 | Ask HR form in ServiceNow