There are tax advantages to owning this special insurance!


For Individuals:

When an individual owns an IRS "tax qualified Long Term insurance" plan they are eligible for a tax deduction based on age not the annual plan cost. The following is the IRS age based schedule for taxable years beginning in 2019: 

● Age 40 and under = $420 - the same as in 2018.


● 41 through 50 = $790. Up from $780.


● 51 through 60 = $1,580. Up from $1,560.


● 61 through 70 = $4,220. Up from $4,160.


● 71 and older = $5,270. Up from $5,200.

How this works: The age based deduction is added to any other unreimbursed medical expenses when completing the IRS 1040. Any amount above 10% of an under age 65 individual’s AGI is a deduction. Individuals 65 and older can deduct amounts above 7.5%.


For Employers:

When purchased through a business the tax deductions are more flexible than for an individual and for the firm's health insurance.

● A Sole Proprietor can deduct the age based amount as a business expense. It is not subject to the AGI limitation for individuals.

● Businesses operating as a Partnership, or in an LLC can take the full annual cost as a business expense. The owner(s) then takes the age-based amount as a personal medical expense deduction. The annual amount above their age based schedule generally becomes taxable income to the owner.

Incorporated businesses: The full annual cost is a business expense and there is no taxable income to the employee when the business pays or when benefits are received. 


One special tax advantage - a business can purchase a plan just for the owner and spouse.

Some points about an LTCi Benefit:  

● It can also be offered to select executives and include their spouses. 

● Moving some bonus or deferred compensation dollars to the LTCi benefit means the firm will have limited if any cost. 

    Key - a LTCi benefit has more value & interest to executives than deferred compensation.

● Payments by the organization could also be connected to performance and/or continued service. This is a great way to retain important employees.

Call John C Parker [860.739.0005] for an appointment to talk about these special tax advantages and implementing a Long Term Care insurance benefit program. 

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