Disability protection for your employees and your business

Many business owners are surprised to learn that wages paid to a disabled employee, not subject to a written plan, are not tax-deductible business expenses. And, business owners may unknowingly expose themselves to claims of discrimination (i.e., age, gender, sexual orientation) by such “ad hoc” payments. A Qualified Sick Pay Plan (QSPP) funded with disability income insurance however, enables a business to pay wages to a disabled employee in a tax-efficient manner, and identifies employees entitled to disability compensation by objective criteria. A QSPP funded with disability income insurance is a valuable employee benefit and business protection tool — a plan that promotes employee loyalty, protects a disabled employee’s (and your business’) financial well-being, and provides your business with a tax deduction.

What is a qualified sick pay plan?

A Qualified Sick Pay Plan (QSPP) enables a business to continue some portion of an employee’s wages during a disability. It is the company’s official plan to continue wages for certain ill or injured employees.

A QSPP funded with disability income insurance shifts the burden of providing a disabled employee’s wages from the company to the insurance carrier. Instead of drawing from cash flow or reserves to pay the wages, the business commits itself to known and consistent disability income insurance premium payments.

Balance sheet benefits of a qualified sick pay plan

A funded plan also improves the business’ balance sheet because of certain accounting benefits. Depending upon the design of the plan, premiums may be employer-paid, which is typical, or split between the employer and the employee.

A QSPP funded with disability income insurance answers all your employee disability questions:

  • Is this employee disabled?
  • How much is this employee going to be paid?
  • Which employees will be covered?
  • Will all employees get the same benefits?
  • Has this employee recovered?
  • How long is this employee going to be paid?
  • When should I implement a QSPP?
  • Who will own the disability policies in the QSPP?

Implementing a QSPP funded with disability income insurance is a simple, smart, and cost-effective business strategy.

Brought to you by The Guardian Network © 2018, 2024. The Guardian Life Insurance Company of America®, New York, NY

2024-173695 Exp. 05/2026

Not seeing what you’re looking for?

The Guardian Network®

Living Confidently is powered by The Guardian Network.

DISCLAIMERS:

Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA or provided by Guardian. BLICOA is a wholly owned stock subsidiary of and administrator for The Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state.

This publication is provided for informational purposes only and should not be considered tax or legal advice. Please contact your tax or legal advisor regarding the tax treatment of the policy and policy benefits and your particular set of facts and circumstances.