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Third party disability insurance

Third party disability insurance is a type of policy that covers employees who take qualified, extended time out of the office. Examples of qualified time off include maternity leave or bereavement leave. It can either be short term (less than 6 months) or long term (more than 6 months) in nature.

Short Term Disability insurance is complex from a tax perspective. Employee taxes are often managed by the insurer, while company taxes like Social Security and Medicare need to be paid by the employer. The specifics of the taxation will vary based on your plan document and the requirements specified by the insurer.

Note: If you have a third party disability policy, please follow these instructions to set it up in your Gusto account. In the meantime, please let us know if you have one of these plans either via the Year End Spot-Check or by contacting our Care team.