Hello,
The company I work for has a base LTD plan which covers 60% of your base salary. The premium is 100% paid for by the company, is not included in my income, and any benefits I receive are fully taxable. The base plan is considered non-contributory.
Optionally they offer a buy-up for an additional 6 2/3% of base salary. I've had this for several years and pay 100% of it with after-tax dollars. The benefits I receive are not supposed to be taxable.
Here is my issue. Last year I received benefits from the plan. I cannot determine from research whether this arrangement is considered contributory or non-contributory. This affects the taxation of the buy-up since, if it is considered contributory, the 3-year look-back rule applies and a portion of that buy-up benefit will end up taxable. Cigna administers our plan and I cannot get anyone to explain to me why the taxable amount is so high.
Kind Regards,
A.