Can an employer require its employees to participate in a long-term disability plan if the employer pays the premiums, but then imputes the premium amount as income to employees on a taxable basis? In other words, the employees will have to pay income tax on the value of the premiums.

From my experience, most employers that do gross the benefit up also take into consideration the tax consequences. For example, if the cost of premium is $400 annually, the employer will actually gross the employee's salary up by say $500 or $550.

If the employer does not take taxes into consideration, I then would say that no, it cannot require employees to take the coverage since there is technically some cost to the employee. With that being said, I think proper communication would make this a no brainer to any employee regardless of the slight tax consequence. What kind of knucklehead wouldn't take an employer sponsored LTD plan in which the benefit was going to be non-taxable if ever used for the slight cost of a couple more dollars a month in taxes? Then again, I know they're out there.