Short Term Disability- Pre VS Post Tax


Annual enrollment time :slight_smile: I just noticed these election options and wondered the different between Short Term Disability Post Tax VS Short Term Disability Pre Tax. What is the difference between the 2 and is one better than the other?

My enrollment defaulted to the Post Tax option.

Thank you!

Hi @AriMoon

Great question! As you noted, often times you have the choice between paying the premiums with pre or post tax dollars. The main difference comes down to when you will be paying taxes.

With pre-tax premiums, you will have to pay tax when you start getting your disability insurance payout. With post-tax premiums, you’d have already paid taxes before paying your disability premium so you can lower/eliminate taxes owed when/if you collect a disability payout in the future.

Post tax is generally the default and what is recommended because it will lower/eliminate your tax obligations if you ever need to take disability. If you are collecting disability your finances might not be as strong as they once were, so having a more favorable tax situation can be preferred.

I hope this helps. Keep us posted with any other questions!


1 Like