Although through payroll deduction, it appears that I paid the premiums as if out of pocket (unlike my medical insurance premiums). I will actually be paid the benefits from the third party (starting next week) through my employer's payroll system, and they are suggesting that it will be treated as if it was wages, vacation pay, etc, W/H, the whole nine yards. Why should this be added to my YTD stub totals and/or W2? Doesn't sound right.
To put "the basics" in a nutshell:
If the premiums you pay are not included in your taxable income, then any policy payout is taxable income.
If the premiums you pay are included in your taxable income, then any policy payout is not taxable.
The above statements are not true 100% of the time. That's just how "MOST" policies work. It just depends on the type of policy you have.