Group Long Term Care Insurance
What is Group Long Term Care Insurance?
As our population continues to age, many employees have direct experience with loved ones needing long term care. And many understand they may be responsible for caring for their parents or themselves. This makes them willing to buy protection that can help – Long Term Care Insurance. This valuable protection helps protect employees retirement plans from the high cost of long term care.
Most employees like the idea of buying this protection where they buy their other benefits – at work. One study shows that four out of five Americans want the option of buying long term care insurance at work.
Employer Sponsored Group LTC Insurance
Here are some of the reasons that businesses take part in Group Long Term Care Insurance programs:
- Simple Underwriting – This type of simplified underwriting is available to groups with as few as 10 eligible employees. Because of the growing number of health restrictions with individual LTC insurance underwriting, this can be a great benefit to offer employees. Any group with only ten people would need at least five applications approved.
- Retain Key Employees – The popularity of group LTC insurance makes a more competitive benefits package. This can help you keep important employees.
- Tax Deductible – Group LTC insurance premiums can be 100% Tax Deductible for C-Corporations. It can also be partially deductible for other types of corporations. The employer can also buy coverage for key employees.
- Protect Family Members – Coverage is also available to the employee’s spouse and family members. This allows them to take part in the discounted group long term care insurance (Multi-Life) rates. Simplified underwriting can also benefit family members in obtaining long term care protection.
Group Long Term Care Insurance Enrollment Options
- Voluntary – Voluntary enrollment means the employee pays for the entire premium
- Defined Plan Design – The employer pays the entire premium amount for a defined plan design. If the employee wants a higher level of long term care benefits, they can apply for and pay the extra premium amount. The employer typically deducts the extra premium from the employee’s paycheck.
- Carve-out – The employer pays for part of, or the entire premium, for the employees or executives (or other defined class) LTC insurance.
- Multi-tiered – A separate contribution level is offered based upon various tiers of employees. A tiered contribution could look like the following:
– Tier A: The employer pays 100% of the insurance premiums for three top executives
– Tier B: Seven key managers are given $100 per month toward their group LTC insurance premium
– Tier C: Employer pays $50 per month for remaining 13 employees
Group Long Term Care Insurance Discounts
Besides discounted multi-life rates, an extra 5% discount may be available to those receiving an Employer Contribution.
A Spousal Discount up to 30% can be applied when both spouses, or partners, apply for and are issued group long term care policies.
Note: Discounts vary by state and insurance carrier
Employer Paid Vs Voluntary Group LTC Insurance
Participating employers may contribute to group long term care premiums for its employees. Or, the employer can choose to offer a voluntary (employee pays entire premium) program. If the employer does not want to pay group long term care insurance premiums for all employees, an executive carve-out (or other defined class) can be a good solution. Group long term care insurance in the workplace has no discrimination guidelines. Long term care insurance benefits can enhance an executive compensation package. This gives the employer better recruiting and retention of its key executives.
Group LTC Insurance Tax Incentives
Your C-Corp can take advantage of 100% tax deductible group long term care insurance premiums as a legitimate business expense. Group long term care insurance (LTCi) can be purchased for both owners of the corporation and its employees.
• Employer paid premiums are not included in the employee’s gross income
• Long term care protection is available to spouses/domestic partners and even retirees
• Premiums paid are not subject to payroll taxes
• Executive carve-outs may be used to pay all or part of the premiums for key employees
S-Corps Partners or More Than 2% Shareholders
• Premiums paid for an owner are included as individual gross income.
• A self-employed health insurance deduction can be taken for tax-qualified group long term care insurance premiums paid. Group long term care insurance premiums are considered a medical expense. This is subject to the standard IRS limits based on age.
Self Employed Individuals
Self employed can deduct tax-qualified premiums as a trade or business expense. This is like regular health and accident insurance payments. Tax deductions are allowed for self employed individuals, their spouses and other tax dependents. The maximum deductible amount for each insured person is limited to the IRS age based amount.
Group LTC Insurance for Non-Employer Associations, Credit Union Members, Unions and Others
- Association Discounts are available to qualified non-employer groups and other types of qualifying associations.
- Non-employer groups and other qualifying associations qualifications:
- The group must exist for a purpose other than to buy insurance
- There must be an active membership rule of at least 200 members
- The organization must have a set of by-laws
Who Sells Group Long Term Care Insurance?
The best LTC insurance carrier for your group depends on several factors. A consultation with one of our group specialists is the first step. We then give you a comparison to illustrate which insurance carrier is best for your group.
Life Secure Insurance Company
LifeSecure Insurance Company believes insurance should be easy to understand, effortless to buy and simple to use. Their group long term care plan uses a straightforward plan design to help round out your company’s benefit package. Headquartered in Brighton, Michigan, the carrier was was founded in 2006 and is a wholly-owned subsidiary of Blue Cross and Blue Shield of Michigan.
Currently, A.M. Best has not rated LifeSecure separately from its parent company. This is because A.M. Best requires additional years in operation to evaluate a carrier’s performance. The parent company is rated A- (Excellent) by A.M. Best.
We do not provide tax or legal advice. Please consult your independent tax or legal adviser to confirm the tax status of long term care insurance premiums and benefits.