Employers

When one of your employees needs long-term care, or must provide long-term care for someone at home, it may put your business at risk because it can have a great impact on your bottom line. You may not notice the cost immediately, but over time it may really add up.

If an employee is providing care for someone at home it is almost as if they have another full-time job. It may affect your business in the following ways:

• Decline in productivity
• Decreased willingness to relocate or travel for work
• Not able to work full-time or must resign
• Motivation and morale are compromised
• Interruptions during the day to handle phone calls or emergencies
• Being absent more often
• Increased stress which could result in health-related problems and further absence from work
• Replacement costs if/when employee needs to finally resign

Long-term care insurance may be one of the newest and fastest growing employee benefits. There are tax incentives to employers for purchasing long-term care insurance on behalf of their employees. Employers can pay for all the coverage, part of the coverage, or have employees pay all the cost. Typically employers are willing to fund part of the plan and then allow the employees to purchase additional coverage.

The following will give you an idea of why it might be smart for you to consider this for your company.

Tax Benefits For Employers
Recent healthcare legislation makes qualified LTC insurance policies more tax advantageous for both employers and employees. Employers that pay for long-term care insurance may be eligible for favorable tax treatment. However, the exact tax consequences vary depending on the structure of the business (example: sole proprietor, partnership, LLC, C-Corporation, etc.).

• Employer-paid LTC premiums for employee, spouse, and retiree coverage may be deducted as a business expense
• Employers can cover defined classes of workers, making it possible to offer the benefit to only higher-paid employees, such as an executive carve-out
• Employees with medical and dental expenses exceeding 7.5% of adjusted gross income may be able to also deduct eligible LTC premiums they pay
• Premiums are not classified as taxable income to employees
• Benefits are not considered taxable income to the insureds and their families (even if the employer paid the premium)
• Benefits are 100% tax-free to the employees whether the employee or the employer pays the premium
• Premiums currently cannot be included in a Section 125 "cafeteria" plan

Advantages For Employees
When an employer offers long-term care insurance to their employees it helps provide the following benefits:

• Financial security, responsibility and freedom
• Preserve retirement accounts and savings
• Ability to keep job
• Employer-paid premiums not taxable as income
• Employee-paid premiums may be deductible as a medical expense
• Long-term care benefits are not taxable
• The coverage is fully portable
• Ability to receive high quality care for themselves and their families

Contact us to learn how to protect your business from the cost of long-term care.

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