You may be wondering why you should go through the trouble of making additional insurance available to your employees. That's a fair question and we would like to answer it. There can be 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 may be eligible for 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 may 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 may be able to also 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.

Long-term care insurance is generally available through groups and to individuals. Group insurance is typically offered through employers, and this type of coverage is becoming a more common benefit. By the end of 2002, more than 5,600 employers were offering a long-term care insurance plan to their employees, retirees, or both. America's Health Insurance Plans, 2004

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.

LTCC-26