New Default Federal Income Tax Withholding Rate for Disability Benefits

Effective February 6, 2018, the default federal income tax withholding rate for taxable employer-provided disability benefits, including long-term and short-term disability benefits, was lowered from 25% to 22%, in accordance with the new federal tax law. Default state income tax withholding rates didn’t change.

To the extent an employer contributes toward the employee’s disability plan premium, that portion of his or her disability benefit is taxable. Disability claimants who don’t submit a W-4 Form are taxed at the default federal income tax rate. Anyone wishing to change his or her federal income tax withholding elections can submit an updated W-4 Form to Cooperative Benefit Administrators by fax to 402.483.9201, attention: Disability Unit; through the message center to Disability Claims; or by mail to CBA Disability Unit, PO Box 6249,  Lincoln, NE 68506.

If you or one of your co-op’s employees has a question about their disability benefit or the process, contact the Member Contact Center at 866.673.2299, and ask for the disability unit.