With the annual cost of nursing homes soaring to $50,000 per year and more for specialized care, more and more companies are considering the viability of establishing insured Long-Term Care plans. A 2001 report by the U.S. Department of Health and Human Services said 40% of individuals over the age of 65 have a 40% chance of entering a nursing home some time in their lives.
Long-term-care premiums paid by a C corporation for all employees, including stockholders, are fully deductible. Sole proprietorships and pass-thru entities may take a full deduction for nonowners and up to 100% for owners depending on their age and the premium amount. And the company-paid premiums are not taxable income to the executive.
Because LTC plans are classified as accident and insurance they are exempt from ERISA guidelines which means companies can decide who participates in the plan and limit it to certain highly compensated employees and their dependents.