Proper planning protects assets in case of illness

But what happens to well-laid plans if an unexpected illness results in the need for long-term care?

Even basic nursing home care for the frailties of old age could put a damper on any savings plans. For business owners, the effects could impact more than personal finances. Long-term care insurance can help individuals maintain control of the care they receive, but more importantly, it can help protect savings and assets from the financial burden that may result.

Statistics cited by the Wall Street Journal have shown that more than half of all women and one-third of men who live to age 65 will likely spend time in nursing homes before they die, illustrating that it’s important to plan ahead and be prepared.

There are a few options for paying long-term care insurance premiums, and these policies offer several advantages for businesses.

Options

Long-term care insurance can be purchased as a benefit for a business owner and/or a select group of officers or key managers.

Depending on how a business is structural, the premiums may be fully or at least partially tax-deductible. A tax adviser can address the specifics of providing long-term care insurance as a benefit to select employees. Long-term care is a serious financial risk, and older employees are probably well aware of it. Employer-provided long-term care benefits could be very valuable to those employees.

Some carriers offer discounts when multiple policies are purchased through a business, and the employer can usually deduct the cost of premiums for non-owner employees.

To extend the benefits of long-term care coverage to all employees, companies can sponsor group plans.

These plans are typically designed in a way that all employees who want coverage must participate on a voluntary basis and pay premiums on their own with after-tax dollars.

But employees may find it convenient and cost-effective to get long-term care insurance through their employers, as carriers again will discount rates for group purchases.

To take the benefit one step further, companies can consider offering employees the opportunity to acquire long-term care insurance for their parents. When valuable employees miss work to care for elderly or ill parents, their employers lose productivity.

By making it convenient for employees to provide for the possible needs of their loved ones, businesses will benefit. Carriers may offer premium discounts when multiple policies are purchased through the employer.

The payments for parents’ long-term care coverage are, in most cases, not tax-deductible for the business or the employee/child.

Availability, however, is still a benefit that employees can appreciate, and it will add value to overall compensation packages.

Business owners taking care of themselves, and enabling employees to do so as well, is a strategy that will pay dividends in the long run.

Timothy M. Reese is senior vice president-investments with A.G. Edwards & Sons Inc. Member SIPC. He can be reached at timothy.reese@agedwards.com.