Offering LTCI

Why consider Long Term Care Insurance:

Baby boomers started turning 65 in 2011.  As of 2016, the oldest of the boomers is turning 70.  The number of older people will increase dramatically from 2010 to 2030. The older population in 2030 is projected to be twice as large as in 2000, growing from 35 million to 71.5 million.  (Source: 2009: Long Term Care Insurance Sourcebook, American Association for Long-Term Care Insurance)

With this shift in demographics, the needs of today’s workforce are changing, too.  More and more employees must care for older family members, adding to their existing responsibilities at home and at work.  As a result, a growing number of employees are:

  • Quitting their jobs
  • Reducing their hours and working part-time
  • Taking a leave of absence
  • Declining promotions, job transfers, and/or relocation opportunities
  • Consider LTCI as a simple solution to this growing business concern

Employers have the option of offering quality coverage as employer-paid or voluntary (employee-paid) benefits: A tax-qualified long-term care insurance policy may provide tax advantages to both individuals and businesses.

 

Multi-Life Programs may offer a variety of discounts including:

  • Group discounts of 5% or 10%
  • Spousal Discounts of as much as 30%
  • Marital Discounts
  • Preferred Health Discounts

Employer-paid Executive Carve Out plans for select key employees

One means for a business to reward key employees is to have the business purchase a long-term care insurance (LTCI) policy for them.  The term Executive Carve Out refers to a select “class” of employees who are eligible for these LTCI policies.

The many advantages to Executive Carve Out plans include:

  • The Executive owns the policy and it is portable.
  • The business may be able to deduct the cost of the premiums using pretax dollars, just like health insurance.
  • The total premium paid by the business is not included in the executive’s taxable income (unless the executive has an ownership interest in a pass-through business entity like a partnership, S corporation, LLC, etc.).
  • Benefits under a tax-qualified long-term care insurance policy are paid to the executive income tax free.
  • Special riders can be purchased, such as a Return of Premium at Death, which returns all premiums paid by the company to the employee’s estate, less benefits paid when the employee dies.

In addition to providing peace of mind, executive carve-out programs reward those who have truly provided exceptional service to the company.

Voluntary Plans

Voluntary plans at no cost to the employer, fully paid for by the employee may be eligible for group discounts and preferred health discounts.

  • Employer Group, Affiliations or Association Groups may be eligible for group discounts.
  • Subject to the type of business, (e.g., C Corp, LLC, Professional Corp., sole proprietors or partnerships) various deductible scenarios exist pertaining to owners and premiums paid on their behalf.

Long-term care insurance is becoming an essential part of today’s benefit packages, whether a voluntary benefit that employees pay for, a partially-paid or executive carve-out plan paid for by the employer.

The discussion of legal and tax considerations in this material is an interpretation of current law and is not intended as legal or tax advice. Your clients should consult their legal and tax professionals to discuss the legal and tax consideration.

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