The long road ahead

There is no escape from aging, yet many people don’t plan for how they will live out their senior years. In fact, most people don’t even want to think about it.
However someone is thinking about it. Recent tax law changes now provide business owners the opportunity to offer employees long-term care insurance.
As of 1997, limited liability corporations (LLCs) and the self-employed can itemize 70 percent of the premiums for long-term care insurance. In addition, the law is relatively flexible.
“An owner can do this for himself and his spouse, and they do not have to include any other employees,” says Jack Harding president of Harding, Harding and Associates Inc., dba Long-Term Care Solutions Agency.
Harding calls long-term care “the missing link in employee benefits today.” The fact that long-term care insurance can not be paid for with pre-tax dollars like many other benefits means most employees are not opting for coverage.
Harding says most long-term care plans today are referred to as “10 pays” — a business owner pays 10 annual installments and is covered for life.
“They can walk away, retire, sell the business, whatever, and have a paid-up, long-term care policy for themselves and their spouse,” Harding says.
As significant as the tax changes are for LLCs, other recent changes include being able to itemize 100 percent of long-term care premiums for C corps with no cap to the amount.
Health care for the elderly is also receiving attention, with legislation pending that will offer tax benefits similar to those of an IRA contribution. The average annual cost of a semi-private room in a Cuyahoga County nursing home is $58,000 to $62,000. Home-care costs are up to $300 a day. According to Harding, 15 percent of senior citizens are in nursing homes and approximately 35 percent are in assisted-living facilities.
And the elderly are not the only ones who may need to utilize long-term insurance. Convalescence from surgeries and accidents often requires extended care.
“Up to 40 percent of long-term health care today is used by working age adults,” says Harding.
“When we see that come through, I think we’re really going to see significant growth in the long-term care insurance market,” says Harding. “I think it’s around the corner.”

How to reach: Harding and Harding, (330) 666-0991

Harding, Harding & Associates