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Extending Benefits for Key Employees with Long Term Care Insurance

| April 30, 2018
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Whether you run a small, family-owned business or a large corporation, attracting and retaining key employees is challenging. In addition to a competitive salary, many companies offer an array of core benefits, including a qualified retirement plan, health insurance, disability insurance, and vacation benefits. However, in some cases, Internal Revenue Service (IRS) anti-discrimination rules limit the benefits received by highly compensated employees. For executive-level employees, consider offering additional benefits, such as long term care insurance (LTCI)

Professionals who have worked hard and built up assets over the course of their careers may be particularly concerned that their savings could be depleted if they need long term care (LTC) in the future. LTC insurance provides a daily, set amount of coverage that can be used to help pay for at-home care, an assisted living facility, or a nursing home. The cost of a policy varies with the daily benefit amount chosen, the maximum benefit amount, and the elimination period (the number of days for which the insured is responsible for care before benefits begin). 

Advantages to the Business and Key Employees 

Providing LTC insurance as an executive benefit can offer advantages to both the business and the employees covered. Consider the following: 

  • When offered to a group of key employees, an employer-sponsored group policy can often provide better coverage at a lower cost per insured than an individual LTC insurance policy. 
  • Underwriting requirements may be less stringent under a group policy, allowing an individual who might otherwise be excluded or charged a higher premium to obtain coverage at a lower cost. 
  • If the business pays the policy premiums, this amount may be tax deductible to the business, and the premiums are not considered taxable income to the employee. 
  • Because LTC insurance policies are consider “tax-qualified,” benefits received are not considered taxable income to the insured. If the employee pays the premiums on the policy, a portion of the cost may be deductible to the employee as a medical expense. 

In today’s highly competitive marketplace, it is important for your business to be creative, yet cost effective when it comes to offering benefits to key employees. Executive LTC insurance may help your business attract and retain valued employees, while helping employees prepare for the future. LTC insurance can help preserve assets, provide options for care, and perhaps most importantly, bring peace of mind to your key employees. And that’s a win-win for your business.

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