What Are The Employer Tax
Incentives For Providing
Long Term Care Insurance?
Whether you are an employer yourself or an employee lobbying for long term care insurance as a benefit, it will help you to know what the employer tax incentives for long term care insurance are.
This type of insurance is relatively new in the market place and as such, is plagued with misconceptions and questions. It is a very under-represented insurance and as such many people are unfamiliar with it.
Why Offer Benefits?
There are a multitude of good reasons to offer benefits to employees, and especially insurance benefits that have between an especially high chance of being needed. The more an employer can offer his or her employees, the more enticing the job and the happier the employee.
This often results in lower turnover and higher productivity. In fact, offering long term care insurance as a workplace benefit may be the only chance many people have of affording it and it may even be a type of coverage that they had never heard of previously. In fact, group policies may be the only way for some people to get this type of insurance.
Individuals have between a one in three to a one in two chance of being in long term care at some point in their life. Long term care insurance will protect your personal financial assets and ensure your privacy and dignity. Long term care insurance has a much higher statistical likelihood of being needed and used than home insurance or even auto insurance.
The Government’s Step
The government has been implementing tax incentives for employers to provide long term care insurance for their employees. This is a logical step in that it reduces the burden on the government. If more people carry private insurance, there will be less demand for Medicaid and Medicare to cover the cost of long term care.
With the stresses on these socially funded systems becoming more and more of a concern as baby boomers age, an alternative is highly attractive to many people. When private long term care insurance is offered as a job perk, or as a part of a benefits package that employees contribute towards, it makes a great deal of sense.
The Company’s Benefits
If the company pays the premiums for the employee, the cost is deductible for the company, the same way it would be for health insurance premiums. For the employee, the amount paid is not included in his taxable income. This policy was brought into effect by the signing of HIPAA (Health Insurance Portability and Accountability Act) in 1996.
As of 2008, approximately half of all states also offer tax incentives for companies offering long term care insurance policies. Each state has differing details as to how the long term care insurance premiums are treated for tax purposes. You should do research on your individual state laws on such matters or consult a tax specialist.
Offerings Of The Policy
Policies that are offered through work places, with tax incentives attached, often have stricter guidelines in place for collection of benefits and for the types of clauses and options that must be offered to employees. These ensure uniformity and are necessary when requirements to become an insured are much less rigid than usual.
Another benefit of these policies is that they cannot be canceled because you no longer work for the employer who started your policy. You may continue to pay your own premiums or transfer the policy to another company should you change jobs.
Even if a company does not take advantage of the tax incentives for providing long term care insurance to their employees; they may offer discounted group rates for those who would like to take out individual policies. If you are lucky enough to have an employer who offers either long term care insurance as a benefit or even group rates, it is important to give such coverage a reasonable amount of consideration, especially if you have assets you would like to protect.
This may be the most reasonably priced, easiest to obtain type of policy you will ever encounter. Do not refuse it without first weighing the pros and cons. In addition, many companies will even extend the group rate to spouses, parents, in-laws and other relatives of the employee.
Tax incentives make long term care insurance attractive for employers to offer and the benefits of having such a policy make it attractive to the employee. Having long term care insurance as a part of a benefits package in the workplace, seems to be a win-win situation. What the employer tax incentives for long term care insurance are is good information to know if you would like to help bring such coverage to your company.
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