USAble Life - Frequently asked questions
- All groups with disability coverage have the option to have USAble Life prepare W-2s annually for disability claims. All new groups must complete a USAble Life W-2 Agreement. If you are an existing group and are interested in USAble Life preparing W-2s annually, please complete the USAble Life W-2 Agreement.
- Short-term and long-term disability benefits may or may not be considered taxable income. The taxability of these benefits is determined by who pays the premium and how it is paid. Contact your tax advisor for more information.
- When a disability benefit is considered taxable, the benefit become subject to tax withholdings. These withholdings include FICA (Social Security and Medicare tax), and FIT (federal income tax). FICA and FIT only apply to the portion of the benefit that is considered taxable based on the descriptions provided above.
Federal income tax withholding is voluntary rather than mandated by federal law. The employee will be responsible for electing how much FIT to withhold (if any) and making any changes to this amount during the duration of the claim.
- Yes. Long-term disability and short-term disability FICA reports are distributed biweekly. Summaries are distributed as well, on a quarterly and yearly basis. These reports are generated automatically and will be sent to all employers that have benefits paid during the applicable periods. You can request additional reports by contacting the USAble Life FICA representative at 1-800-648-0271.
- Please consult with your tax advisor for an answer appropriate to your company. Unless the FICA-matching service is requested for short-term disability, USAble Life will only withhold and submit the employee's portion of FICA as reflected in the reports provided to your office.
- No. Only groups that had employees on disability in the applicable month will receive the monthly report. Every group will receive a report at the end of the year if any disability benefits have been paid during the year.
- The employer will be responsible for FUTA and SUTA taxes on both short-term and long-term disability payments. Please refer to IRS Publication 15A, under the sections regarding sick pay, for details on instances in which the payments may be exempt from FUTA.