The Tax Advantages of Long Term Care Insurance
There are huge tax advantages to buying a Tax Qualified Long Term Care insurance plan. Paying premiums through your business offers the most attractive scenario. Depending on the type of business (ex. C-Corp, S-Corp, partnership, etc.) a large portion of the premiums may be tax deductible. In addition, the benefits in most cases may be tax free. Also, an employer can choose specific employees to buy coverage for and deduct the premium while the employee does not take it as income. Refer to sections 105 and 106 of the IRS code for details. As far as individuals are concerned, LTC insurance is treated the same as health insurance.
Long Term Care is Your Responsibility
One last important note is that when the Deficit Reduction Act of 2005 was signed by President Bush in February 2006, the federal government sent a clear message to Americans - planning for Long Term Care is your responsibility. In order to preserve Medicaid for those who truly can't afford care, the new rules make it more difficult for people to transfer personal assets in order to qualify for Medicaid coverage of Long Term Care in nursing homes. This legislation also set the stage for all states to offer Long Term Care Insurance Partnership Policies - these were originally set up in the 1980's to encourage people who would have otherwise turned to Medicaid to finance their Long Term Care to purchase LTCi. All in all, the new law provides even more incentive to plan.