What critical element must be included in a disability income policy to ensure tax-free receipt of benefits?

In a disability income policy, including employee contributions to the premium is essential for ensuring that the benefits received are tax-free. When an employee pays the premiums out of pocket with after-tax dollars, any benefits received during a period of disability are typically not subject to income tax. This is because the Internal Revenue Service (IRS) treats benefits that come from policies funded with after-tax contributions as a return on investment, which is not taxable.

On the other hand, if the premiums are paid entirely by the employer, then any benefits received would typically be taxable, as the employer's contributions are considered a business expense and provide a tax advantage. Therefore, employee contributions create a scenario where the benefits can be received tax-free, making Option B the critical aspect for maintaining that tax status.