Many employers are not aware that federal tax rules allow premium payments for long-term care insurance to be treated as medical expenses.
EM-Power Services Inc. (http://www.longtermcarefacts.co), a provider of long-term-care insurance encourages benefits planners to realize new opportunities for savings.
With numerous tax incentives available to employers, long-term care insurance can be provided at little or no cost to the company. Premium payments are tax-deductible to the employer, based on form of organization. In addition, many states now offer separate incentives to encourage long term care insurance protection. EM-Power Services works with employers nationally to design long term-care insurance-benefit programs that optimize tax incentives on both the federal and state levels.
As tax season approaches, benefits planners are re-examining long-term-care insurance as a way to offer insurance that protects employees, but does not mean additional costs for the company.
“Employers are realizing that their health-insurance and disability plans do not cover long-term care expenses,” said Doug Ross, president of EM-Power Services Inc., which provides long-term-care insurance planning and support to employers nationally. “This leaves employees vulnerable to long-term-care expenses, and means savings, retirement, and other assets, like a home, can be at risk.”
Long-term-care insurance covers costs whether it’s in a home, rehabilitation center, or a skilled-care facility, including nursing homes. The national median daily rate for nursing-home care is $213 a day, or $77,745 a year, with an average stay of three years, costing $233,235. And the costs keep increasing. The costs for nursing-home care increased more than 5% between 2010 and 2011.
Employers can also save by being selective in how they offer the employee benefit. “Federal tax rules allow employers to selectively pay premiums for groups of employees such as owners and key executives,” Ross said. “These rules substantially reduce the cost of long term care insurance for the employer, and also help recruit and retain highly valued employees.”
Also, premiums paid by the employer on behalf of employees are deductible as a business expense. They do not count as income for the employee. When benefits are paid out, they are generally received by the employee as tax-free. Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the employee and the employer may both make the premium payments.
To help employers understand the tax benefits of long-term care insurance, EM-Power provides a free tax-benefit analysis based on the employer’s form of organization and location. Employers can obtain the free analysis by contacting EM-Power Services at 1-800-483-1115. Employers can also download a free tax guide at http://longtermcarefacts.co/tax/