Business Owners Guide

Pre-Tax Business Dollars Protecting Your Personal Assets

Premium payments for a tax-qualified (TQ) long-term care insurance 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].

CONSIDER: Why would the busy owner of a business need to think about long-term care protection?

  • Because costs may be fully tax deductible and not taxable to the employee.
  • Because today's pre-tax dollars can protect personal assets tomorrow and in retirement.
  • Because this is a real financial risk faced by loved ones and family members.
  • Flexibility in who is covered.

WAITING: The Greatest Mistake

Waiting to purchase long-term care insurance could be a very costly mistake.

  • The cost for coverage increases each year by age.
  • A change in your health could cause you to be rated: increasing your cost substantially...or preventing you from qualifying at all.

CHOOSE WHO TO COVER: Can you discriminate?

It may be possible to create a bona fide class of select corporate employees that are eligible for this 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.

A BENEFIT: For Key Performers

Long-term care insurance is one of the newest employee benefits offered by businesses to attract and retain top performers. A growing number of companies offer this popular new benefit on a voluntary basis; allowing employees to pay the full cost through payroll deduction