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Employers & Associations
LTCI in the Workplace
Today’s
generation of LTCI products are designed to be flexible, providing both
employers and employees with varying options. Several scenarios are available
that will help balance cost efficiency with product design.
Executive Carve Out
The 1996 Health Insurance Portability and Accountability Act (HIPAA) gives
employers tax incentives for providing tax-qualified long-term care insurance
for their employees. Executive carve-out has historically been the most
successful approach because of its tax advantages and incentives for key
employees and family:
•
Executive
Carve Out
• Employer-paid premiums are deductible
as a business expense for employee (plus spouses and their dependents)
policies for C-Corps and Professional Corps. (Rules apply differently
for S-corps, Partnerships and LLCs)
• Premiums are not included in
employee’s income, and policy benefits are received tax-free
• HIPAA allows discrimination
and carve outs of classes of employees for LTC insurance offering as a
benefit
Employee
Benefit
Many employers recognize the need to provide long term care insurance
for all their employees as a fully paid employee benefit. Most significantly,
insurance carriers can provide for group discounts, as well as offer simplified/guaranteed
issue underwriting. Group sizes can range from 10 employees to 1,000+.
Employee Contribution
Some businesses are willing to pay a portion toward the cost of the plan
with the employee "buying up" to higher benefits. As an employer
you may elect to pay for a core base plan, and provide an opportunity
for employees to pay for the "buy up".
Employer Sponsored Voluntary Offering
Some employers see the need for LTC insurance but cannot fund the premiums.
However, they will endorse a program in which employees can purchase discounted
coverage through the business. Three key benefits:
•
Executive
Carve Out
•
Carrier
discounts simplified underwriting are available from some carriers
•
Individual
products in a "Group Wrapper" offering a 3-tier High/Medium/Low
selection are more comprehensive than most "true" group products
•
Plan
may be offered to employees and their families
