Long Term Care for Employer Groups
Special Rules for Certain Employees
Business and Investment Income
Sickness and Injury Benefits
Long-Term Care Insurance Contracts
In most cases, long-term care insurance contracts are treated as accident and health insurance contracts. Amounts you receive from them (other than policyholder dividends or premium refunds) are excludable in most cases from income as amounts received for personal injury or sickness. To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return.
A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. The contract must:
• Be guaranteed renewable;
• Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed;
• Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and
dividends under the contract may be used only to reduce future premiums or increase future benefits; and
• In most cases, not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses.
Qualified long-term care services. Qualified long-term care services are:
• Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services; and
• Required by a chronically ill individual and provided pursuant to a plan of care prescribed by a licensed health care practitioner.
Click here to view our MAIN page on Long Term Care for details on how the coverage will benefit you and your employees.
Email us [email protected] for complementary quotes & information.
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)
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
- §1035 Exchange of Annuities or Life Insurance for Long Term Care Planning
- 7 Activities of Daily Living ADL
- Can’t afford premiums or not medically qualified
- Costs of Long Term Care
- Employer Groups – Long Term Care
- Low Income – Assets Assistance – Alternatives
- Mutual of Omaha LTC
- Nursing Homes – Assisted Living – Finding and Selecting the best ones
Fringe Benefit Overview
Fringe Benefit Exclusion Rules
Accident and Health Benefits
De Minimis (Minimal) Benefits
Dependent Care Assistance
Employee Stock Options
Employer-Provided Cell Phones
Group-Term Life Insurance Coverage
Health Savings Accounts
Lodging on Your Business Premises
Retirement Planning Services
Transportation (Commuting) Benefits
Working Condition Benefits
Fringe Benefit Valuation Rules
General Valuation Rule
Lease Value Rule