Obamacare: short term disability benefit can be “income”

Is employer based short-term disability payments (Sickpay) reportable income on Obamacare?

Kim in Michigan

Dear Kim,
The answer is “it depends”. If your short term disability plan is entirely paid for by your employer, then the benefit (sick pay) would be taxable income. If you pay for the plan in after-tax dollars, then the benefit would be tax free. I’m guessing that this is an employer benefit, and therefore the sick pay is taxable. You would get a tax form from the plan around the same time that you got your W-2 form.
Before you include it in your income for health insurance subsidies, remember a few things: your income in 2014 is the important factor, not your income in 2013. If you were out on sick leave last year and – hopefully – you are back to good health, then you can set the sick pay aside and just estimate your 2014 income. If you might be out on leave this year, then yes, the disability benefit will “count” and should be included in your estimate.

Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.