Long-Term Care Insurance

An individual Long-Term Care Insurance policy can be offered to all your employees or to key employees as a benefit.

Most people think long-term care refers to nursing home care for elderly individuals. While it is true that nursing home care qualifies as long-term care, that's only part of the picture. Eighty five percent of all long-term care is provided in the home. Americans spend $33.1 billion for home health care services.

Long-term Care Insurance Helps Reduce Employee Absenteeism

Caring for aging parents is a growing cause of employee absenteeism estimated to cost businesses $17 billion each year.

According to a study commissioned by the Alzheimer's Association, a full time employee with care-giving responsibilities is absent 12 full or partial days per year is interrupted an average of 50 hours per year, and has other time losses totaling 23 day per year.

For Self Employed:  payments for a tax qualified long-term care policy purchased by a self employed individual or sole proprietor are currently treated as medical insurance premiums with the same limits as those for individual tax payers.

For C-Corporations:  premium payments for the Tax Qualified long-term care policy are fully 100% deductible as a reasonable and necessary business expense - similar to traditional health and accident insurance premiums (IRC Sec. 7702B[a][3]).

Tax deductible insurance protection ca be purchased for employees and owners. Company-paid policies can cover spouses, even though they are not employed by the company and retirees.

Pre-Tax Dollars Fund Post-Retirement Asset Protection

Employer-paid premiums are excluded from the employee's gross income and eventual benefits are not taxable on tax qualified policies.   NOTE: Policies paid for a director who is not an employee' may be deducted but the premiums paid may represent taxable income to the director.

Can You Discriminate?

It may be possible to create a bona fide class of select corporate employees that are eligible for a corporate-paid benefit (Section 105/106 Medical Reimbursement Plan). Premium payments generally will be fully tax deductible when the class is based on such factors as officers of the corporation and length of service. Tax rulings have stipulated that the class can not, however be based on stock ownership. CONSULT A TAX ADVISOR.

S-Corporations:  Premium payments for a tax-qualified long-term care insurance policy for a partner or owner / 2%+ are subject to the same rules as applicable to self-employed individuals.

Premium payments for policies purchased for a non-partner / non-owner or less than 2% shareholder-employee are fully deductible as a reasonable and necessary business expense so long as the entity does not retain any interest in the policy. The same is true for their spouse or tax dependents.
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