These benefits are handle directly by the insurance company. Entries for LTD do not belong in your financial records. If the employee paid the full premium for the LTD coverage then the payments she is receiving now are tax free.

Thank you for your reply.  The employer pays 50% of the LTD coverage so what happens then?

The bigger question - does the employer pay 50% of a benefit package including the LTD. If so, the insurance company will probably allocate the employer's payment to the other coverages leaving the LTD to appear to be paid fully by the employee. This was a common practice when I worked in the administration of group benefits a number of years ago. In either case the benefit payments do not get recorded in the company financial records. The insurance company is responsible for the payment and deductions required. This can probably be easily cleared up with a discussion with your agent/broker.

Hi Joy, you should check with your Benefit Provider as a lot of benefit companies waive the premium costs when an employee is on Long Term Disability.