Long Term Care for Employer Groups

What Every Business Needs to Know about Long Term Care 

Long Term Care for Employer Groups is a business expense deduction and the benefits are received tax free. ^{bjfim.bordenhamman.com ♦ §7702 B  ♦ §104}   

Click here to view our MAIN page on Long Term Care for details on how the coverage will benefit you and your employees.

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C-Corps can benefit from complete (100%) deductibility of the tax-qualified long term care insurance premiums as a business expense. Long Term Care Insurance (LTCi) can be purchased for employees and owners.

• Premiums are not included as part of the employees gross income

• Coverage can be offered to spouses/domestic partners and retirees

• Payroll taxes are not required for premiums paid

• Executive carve-outs may be established to pay all or a portion of the premium for key employees

S-Corps Partners or More Than 2% Shareholders

• Premiums paid for an owner are included in individual gross income.

• A self-employed health insurance deduction can be taken for tax-qualified LTCi premiums paid. LTCi premiums are considered a medical expense and are subject to the IRS age-based limits found in the first chart on the previous page.

Self employed individuals can deduct tax-qualified LTCi premiums as a trade or business expense similar to traditional health and accident insurance premiums. A tax deduction is allowed for the self employed individual, for his or her spouse and other tax dependents. The annual deductible maximum for each covered individual is subject to the IRS age – based limits found in this chart.   (Agent Manual)

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Technical Links & Resources

26 U.S. Code § 7702 B – Treatment of qualified long-term care insurance

(a) (3) any plan of an employer providing coverage under a qualified long-term care insurance contract shall be treated as an accident and health plan with respect to such coverage [Section 106 tax deductibility of Medical Insurance Premiums]

b (1) The term “qualified long-term care insurance contract” means – click on link above to view full code & definition.

Revenue Procedure 2013 – 35  Maximum Contribution

IRS Publication 502 Medical & Dental Expenses

Bulletin 97-31 Guidance

Tax Facts   requires subscription