6 November 2012 0 Comments

Long Term Care Insurance: A Perk For Key Employees

Long Term Care Insurance (LTCI) is a topic that interests Americans who have reached age 55+.  Most people of this age have first hand-experience with a family member or have heard of a friend who has had huge costs caring for debilitating conditions associated with advanced age.  Depending on whose statistics you look at, more than 50% of us will require extensive LTC after the age of 65.  Still, very few people do anything about this important protection, likely because of high premiums and/or confusion about benefits.

LTCI provides employers with a great perk for key employees.  Under current tax laws, LTCI premiums paid by an employer for the benefit of the employee and spouse are tax deductible to that employer and not reportable as income by the employee.  Benefits from a tax qualified LTCI policy that reimburses for cost of care are not taxable to the recipient.  There is no discrimination test, so LTCI can be provided only for select employees as long as adding its premium for a given employee does not exceed the test of “reasonable compensation.”

Often, a premium discount is made available for individual policies based on a minimum number of employees included.  The policies are portable upon termination of employment.  An employer could provide an all encompassing policy, paying the entire premium for the employee and spouse, or a base-line policy for the employee only, allowing the employee to add benefits at their own cost.  Again, there is no discrimination test, so these benefits can be totally selective.

If you are you are both the employer and the employee, why aren’t you providing LTCI at least for yourself?  Certain restrictions on S-Corporation owners apply to qualify for the tax free nature of the premiums paid.  All you need is an agent who understands the product and has access to the insurance companies with the best policies.  The number of insurance companies offering LTCI is rather small.

If you are an agent who wants to learn more, or if you are a consumer looking for an agent, call my source: Rick Lavis, CLTC, LTCP at 818-854-3034.  Tell Rick you are a reader of my Blog.

Next I’ll be returning to life insurance availability for people with medical conditions and will be discussing how elevated blood pressure and cholesterol affect premium. 

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