Which of these noncontributory group plans would a claim likely result in the payment of federal income taxes?

Disability income benefits received from a noncontributory group plan are typically subject to federal income taxes. When the employer fully pays for this type of plan, any benefits received by the employee while they are unable to work due to a qualifying disability are considered taxable income. This situation occurs because the premiums for this insurance were paid by the employer without any contribution from the employee, resulting in the income being classified as a benefit rather than a reimbursement for a personal expense.

In contrast, health reimbursement arrangements are designed to offer tax-free reimbursements for qualified medical expenses. Life insurance death benefits are generally not subject to federal income tax, making them a more favorable choice for tax purposes. Accidental death and dismemberment benefits, similarly, are also typically tax-exempt when received, provided they are structured properly. Thus, disability income represents the unique case among these options where the benefits are taxable at the federal level due to the employer’s total contribution to the insurance premium.