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Long-Term Care Planning Considerations for Business Owners & Executives

September 29, 2015

By Joseph Potosky & Christopher Schaefer

Why Business Owners May Want to Offer LTC Insurance

  • Help employees protect their savings and retirement (401k or 403b)
  • Help employees and their families with caregiving which reduces caregiving stress
  • Attract new talent and retain key employees
  • Tax advantages for the employer and policyholders
  •  Enhance existing ancillary benefit options through the employer

Why Employees Are Concerned

  •  Experience with a major family health problem
  •  Having someone to care for me in my old age
  •  Outliving my assets
  •  Responsibility for aging parents

Key Advantages

  •  Simplified Underwriting – fewer health questions for employees and working spouses
  •  Tax deductible premiums for employees and spouses (HIPAA 1997)
    • 100% for C-Corp & PC
    • Employees do not pay taxes on employer funded premiums
    • Owners may deduct up to age based limits for pass-through organizations (Sole-Prop., Partners, S-Corp, LLC, LLP)
  • Discriminatory – employers may choose who to cover using a “carve-out” approach (not subject to ERISA) or can make available voluntarily
  • Limited pay premiums (LifeSecure - 10 years – allows premiums to be paid during peak earning years and maximizes business tax breaks.)
  • Easy On-Line Enrollment (LifeSecure - self-enroll via web portal)
  • Portable policies – to carry into retirement
  • Additional Family Members - may receive group discounts
  • Unisex Pricing in Employer Groups – significant advantage for female employees

Compelling Facts and Trends

  • The Pew Research Center found last year that nearly 4 in 10 American adults identified themselves as a family caregiver and the need is only growing.
  • An AARP study said that in 2010 there were seven potential caregivers (typically adult children ages 45 to 64) for adults older than 80. But by 2050, that ratio may drop to 3 to 1.

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