Many employers offer disability income insurance as part of their employee benefits program. If your employer pays the premium, you will pay tax on any disability benefits you receive. If you purchase disability income insurance yourself, and pay for it out of your own pocket with after-tax dollars, the benefits you receive are generally tax free. This distinction is important to consider. If you have employer-provided disability insurance, you may want to supplement it with an individual policy. In some states (NY, NJ, RI, CA, PR), employers may be required to provide disability income insurance.