Employers

Many employers offer medical, dental and life insurance, but what about protection from one of the greatest risks to employees retirement savings and family – the high cost of long term care?

Did you know that many employers, including small to medium-sized employers, are realizing the value of offering long term care insurance to both their employees and the business? Increasingly, long term care insurance is recognized as a crucial component to effective retirement strategies. Because it helps protect employees’ retirement assets, long term care is often a natural fit with retirement benefits. As part of a total benefits package, it can also be an effective way to recruit and retain key employees.

In addition to helping provide important protection against the financial and emotional cost of long term care, individual long term care insurance offers advantages to both the employer and employee:

Employer Benefits

• Premium contributions made by the employer are generally tax deductible.
• Provides a great incentive for key employees to remain with your company.
• Employer can select participants.
• A discount is available to employees and approved companies and members of approved associations.
  

For Business Owners
Many business owners are unaware of the availability and affordability of long term care insurance. Consider:

• C-Corporation owners are treated like other employees if certain requirements are met.
  IRC Sec 106 (a), 105(e); see Estate of Leidy v. Commissioner, 77-1-USTC (4th Cir. 1977), Epstein v. Commissioner, TC Memo 1972-53.

• Self-employed, sole-proprietors, partners, owners of limited liability companies, and more than two percent owners of S corporations or limited liability companies follow the self-employed accident and health insurance deduction rules that allow a business expense deduction for 2008, subject to age-related deduction limits indexed annually to offset inflation for long term care premiums. The limits depend on the insured’s age:

	Limits for 2008 (subject to annual indexing)
	Up to age 40	$310
	Age 41 – 50	$580
	Age 51 – 60	$1,150
	Age 61 – 70	$3,080
	Age 71 & over	$3,850

“Age” is the insured’s attained age before the close of the taxable year. IRC Sec162 (l), IRC Sec 401(c) (1), IRC Sec 218 (d) (10)       

Employee Benefits

• Long term care insurance should be considered an integral part of a comprehensive financial strategy.
• Employees generally do not pay income taxes on premiums paid by the Company.
• Policy is purchased when it is generally most affordable – at a younger age and better health.
• Can be paid up before retirement.
• In addition to key employees, an individual LTC insurance policy can be offered to the rest of a company’s employees at a discounted rate (over what they would pay individually) through an employer group discount.
• Spouses or other members of the same household can receive up to an 80 percent discount⁵.

Long term care insurance from Minnesota Life helps:

• reduce or eliminate the financial and emotional burden on family members.
• prevent long term care expenses from draining retirement assets and other savings.
• maintain independence by helping to provide choices for care - including care at home.
• avoid dependence on Medicaid or other services.

Three payment options are available:

• Lifetime premium
• 10-year premium payment⁶
• 20-year premium payment⁶

This long term care insurance is intended to be a tax qualified individual long term care insurance policy.

Tax Considerations
This information is a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances.

⁵ Limited to spouses only in MD. Referred to as Additional Insured coverage in NJ. When a joint policy is purchased, all benefits and provisions of the policy apply to each insured independently.

Coverage is provided by Policy Forms ML7500P et al. (In ID, ML7500P-ID, In NC ML7500P-NC, in PA, ML7500P-PA, and in TX ML7500P-TX). Underwritten by and the financial responsibility of Minnesota Life Insurance Company of St. Paul, Minnesota. For costs and further details of coverage, including exclusions and reductions or limitations and the terms under which the long term care insurance policy may be continued in force, contact your representative/agent. THE PURPOSE OF THIS MATERIAL IS SOLICITATION OF INSURANCE.

⁶ In TX, 10 and 20 year payment options available through policy forms ML7500P-TX and ML7501P-TX respectively. With either option, the policy continues in force and no further premium payments are due once premium payments have been made for the specified period.