Benefits

Why Should You Bother?

You may be wondering why you should go through the trouble of adding another product to your current employee benefit program. That’s a fair question and we would like to answer it. There are benefits to both the employers and employees.

Benefits For Employers
Favorable Tax Treatment:

Recent health care legislation makes qualified LTC insurance policies more tax advantageous for both employers and employees. Employers that pay for long-term care insurance will receive favorable tax treatment. (The exact tax consequences vary depending on the structure of the business; i.e. sole proprietor, partnership, LLC, C-Corporation, etc.)

	Employer-paid LTC premiums for employee, spouse, and retiree coverage can 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 percent of adjusted gross income can deduct eligible LTC premiums they pay.
	Premiums are not classified as taxable income to employees.
	Benefits are not considered taxable income to the insureds or 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.

Over 3,000 employers in the United States offered long-term care insurance to their employees in 1999, and almost one-third in the previous year made a contribution to the premium. Life Insurance Market Research Association, 2000
Long-term care insurance was the single benefit most desired by employees in the William M. Mercer, Inc. 1998 Survey on Employer Benefit Preferences.

Benefits 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
	Receive high quality care for themselves and/or family

Two-thirds of employees who responded to the 1999 National Council on Aging/John Hancock Survey agree that LTC is the greatest threat to their standard of living in retirement.