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Long-Term Care Executive Carve-Out

Nov 13, 2012 4:43:00 PM

Long-Term Care insurance (LTC) has been among the fastest growing executive benefits for the last several years. As we approach the end of the year, many employers are reviewing their strategy for retaining key contributors and Long-Term Care insurance could provide valuable tax incentives.

LTC was excluded from the nondiscrimination rules in the Affordable Care Act, leaving employers free to use this benefit strategically. In addition, LTC insurance enjoys a very attractive and unique tax treatment:

  • Premiums paid for employees and their spouses/partners are tax deductible to the organization
  • The executive is not taxed on the value of the employer's premium contribution (no imputed income)
  • LTC benefits pay out income tax free

Many organizations will use an accelerated premium such as a 10-year premium schedule to create a “golden handcuff” for their top talent. The company funds and deducts the premium for the executive, and after 10 years, the executive owns a fully paid-up LTC policy, that will provide tax free liquidity to protect their retirement assets from the cost of an extended healthcare event.

With as few as three applications an organization may qualify for simplified underwriting and discounted rates. Contact us if you're interested in learning more!

Controlling Cost of Health Care Spending


Written by Gibson

Gibson is a firm of advisors and consultants that help clients get to the proactive side of insurance. We specialize in working with companies looking to find their edge—where they are growing as an organization, differentiating themselves in the marketplace, and preparing for current and future risk. Together we will find the perfect combination of insurance and consulting.