Your Business Advantage

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Your Business Advantage

• LTCI as a Key Person Benefit

8530-05-06
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• Having adequate long-term care insurance is the
  single most influential determinant of whether an
  individual will have a financially secure
  retirement
• Employee Benefit Research Institute study,
  Employee Benefit News, 2/1/04

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Overview

• Purchase during high income years
• Deductible as a business expense, including
  spouse
• Benefits generally Tax-Free
• You chose who to cover
• Premiums may be fully paid before retirement

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Why Plan Now

• We are living longer!
• Long Term Care is Expensive
• LTC Costs increasing faster than inflation
• Health changes may make you ineligible

LTCi Sales Strategies, March 2005.
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The Cost of Care

• Average yearly cost of nursing home care

Health Spending Projections Through 2013,
Office of the Actuary, Centers for Medicare and
Medicaid Services, February, 2004 MetLife Mature
Market Institute Market Survey of Nursing Home
home Care Costs, September 2005
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How Will You Pay?

• Health Insurance
• Medicare
• Medicaid
• Self-insure
• your own, after tax dollars!
• Savings
• 401k

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What impact could this have on your retirement
savings?

• Assumptions
• Current Ages 52 / 50
• Five Years of LTC, beginning age 72, _at_ 200
  current cost
• 5 Compound Inflation - LTC Costs
• 6 Net Return on Investments, 0 Tax and other
  adjustments

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LTCI As Key Person Compensation

• Your business deducts the full premium for
  employees and spouse
• includes C Corp Owner-Employee
• You can discriminate by class
• Premiums do not count as income
• Benefits are generally tax free
• Can elect a 10Pay
• (IRC Sec. 105(b) and IRC Sec. 106(a) Exclusions)

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LTCI and the Self-employed Health Insurance
Deduction
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LTCI and the Self-employed Health Insurance
Deduction

• Deducts eligible premium amount for owner and
  spouse
• Form 1040 line 29
• Example
• Bonus Distribution 100,000
• (Includes LTCI Premium
• of 5,191)
• Insured age 55, Spouse age 52
• Deduction for Eligible
• Premium 1060 x 2 (2,120)
• AGI 97,880
• sole proprietorships, partnerships, S
  corporations and most limited liability companies
  (IRC Sec. 162(l) Deduction)

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Sample Plan Design

• 200/day NH HCBC
• Compound benefit 5
• 90-day elimination period
• Lifetime benefits
• Indemnity benefits
• 10 pay option

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Joint Rates, 10Pay

• Annual Cum. 10yr. Daily Benefit
  Annual Benefit
• Age Premium Premium At Age 85 At
  Age 85
•  
• 40/40 12,000 120,000 1,800 656,270
•  
• 45/45 11,000 110,000 1,408 513,920
•  
• 50/50 10,500 105,000 1,104 402,960
•  
• 55/55 12,000 120,000 864 315,460
•  
• 60/60 12,500 125,000 678 247,470
•  
• LTCI Walk away fringe benefit
•  

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How to Choose a Long Term Care Company

• Financials
• Ratings
• Engineering
• 10 Pay
• Indemnity Benefit
• Consumer Value
• Premium
• Features

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How does LTCI Help?

• Helps Relieve the Financial Burden
• Business Owner enjoys tax deduction during high
  income years
• Helps Pay for Care
• Avoid paying with personal. After-tax dollars
• Helps Protects assets
• Living Expense
• Retirement Savings
• Legacy

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How does LTCI Help?

• Relieves the Emotional Burden
• Puts a Plan in Place
• Avoids crisis planning
• Provides an Advisor to help
• Develop a plan of care
• Locate care service programs in your area
• Arrange and monitor care
• Helps ease the burden on the family
• Reduces Caregiver Stress
• Can remove potential sibling/family conflict
• Participate in care, rather than provide it

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• Long Term Care Insurance
• allows your retirement plan
• to execute for the purpose
• for which it was intended.