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VLOL Question(s)

Old 11-03-2017, 06:53 AM
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Does anyone know off hand if the benefits that come off our new VLOL insurance are taxed or is the payment tax free?

For example, I have elected the tax free/post tax LOL/LTD option from the company, so theoretically if something tragic happens and I can’t hold a medical anymore then I’ll receive $12,500/month tax free from the company until age 65.

The VLOL benefit would pay an additional $12,500/month for 5 years after the 180 elimination period, but is that VLOL $12,500 taxed or post tax?
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Old 11-03-2017, 07:37 AM
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Whack,
Sorry can't help with the VLOL question. If you haven't already, plug in your numbers in the disability calculator on the SWAPA homepage. Great tool to see how things unfold for each month (Different STD plan options) and after 5 years once the LOL payment stops.
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Old 11-03-2017, 07:49 AM
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Thanks. I have but it still leaves me questioning whether VLOL benefits would be taxed or if they come post tax.

Which leaves me wondering the same thing about the $1364/week STD payments in months 2-6.
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Old 11-03-2017, 08:00 AM
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Originally Posted by WHACKMASTER View Post
Thanks. I have but it still leaves me questioning whether VLOL benefits would be taxed or if they come post tax.

Which leaves me wondering the same thing about the $1364/week STD payments in months 2-6.
The short answer is that if the company pays the premium, or the premium is paid with pre-tax withholding, then the payments are taxable.

If you pay the insurance premium with after-tax $, then the benefits are tax exempt.

A lot of pilots think it is "better" if the company pays for LOL insurance, but personally I would rather make (i.e. negotiate for) a few extra $$ and pay for it myself so the benefits are tax-free.
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Old 11-03-2017, 08:05 AM
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Originally Posted by navigatro View Post
The short answer is that if the company pays the premium, or the premium is paid with pre-tax withholding, then the payments are taxable.

If you pay the insurance premium with after-tax $, then the benefits are tax exempt.

A lot of pilots think it is "better" if the company pays for LOL insurance, but personally I would rather make a few extra $$ and pay for it myself so the benefits are tax-free.
And you’re referring to the VLOL as well? Because the premium for VLOL would be automatically deducted from my bank account every month, so in theory then using already taxed money and therefore VLOL benefits would then be tax exempt, correct?
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Old 11-03-2017, 08:58 AM
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Originally Posted by WHACKMASTER View Post
And you’re referring to the VLOL as well? Because the premium for VLOL would be automatically deducted from my bank account every month, so in theory then using already taxed money and therefore VLOL benefits would then be tax exempt, correct?

that is correct
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Old 11-03-2017, 10:13 AM
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Alright. Thanks.
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Old 11-03-2017, 07:11 PM
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And just to make sure: VLOL is NOT available for probies?
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Old 11-04-2017, 04:12 AM
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Originally Posted by WHACKMASTER View Post
Does anyone know off hand if the benefits that come off our new VLOL insurance are taxed or is the payment tax free?

For example, I have elected the tax free/post tax LOL/LTD option from the company, so theoretically if something tragic happens and I can’t hold a medical anymore then I’ll receive $12,500/month tax free from the company until age 65.

The VLOL benefit would pay an additional $12,500/month for 5 years after the 180 elimination period, but is that VLOL $12,500 taxed or post tax?
Company-provided LOL - taxed by default; can elect to pay imputed income so it does not get taxed should you go out. Currently in open enrollment period to make your election.

VLOL - tax free.

STD plans - tax free.

LTD plans - tax free.

Originally Posted by Jeff Lebowsky
And just to make sure: VLOL is NOT available for probies?
I believe it is available, but it doesn't make financial sense for a probie as first-year gross pay isn't high enough yet to justify it. If you're a high time flyer, you should consider it in your 2nd year. As I understand it, the threshold where you may want to consider it is when you hit the 170-200k gross income range on up.
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Old 11-04-2017, 04:54 AM
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Thanks RJS. Very helpful....
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