If you’re in the group health marketplace or work with business owners, you’re getting ready to bring “news”: good, bad or indifferent, to your clients regarding ACA’s impact on their lives in 2015. We understand your pain and theirs; we’re business owners and the impact on us and our employees in the past 18 months has been mostly unpleasant.
That being said, you can bring good news to business owners who are concerned about preserving their retirement income and their assets. As we’ve said many times: traditional long-term care insurance benefits are always received tax-free; and for business owners the premiums are partially or fully tax deductible. The benefits of this should be obvious. Business owners can protect their income and assets with highly leveraged, tax-deductible dollars. This is a great message to bring to clients who are getting squeezed by higher health insurance premiums and taxes.
This approach works for sole proprietors as well as for businesses with W-2 employees. If there are at least three employees (including the owner) they get another advantage: simplified underwriting! Your eyes are not lying! Virtually every employee working in a company with three or more lives will qualify for long-term care insurance (ages 65 and younger), if they can answer “no” to a series of knock-out questions on a simplified application.
Here are the rules in a nutshell:
- LTCi is available for groups of three employee lives and up. The rules are more flexible as the groups get larger.
- Groups 3 – 9: minimum of five approved applications, including spouses, to get Simplified Issue (“SI”). Employer pays 100% of a defined benefit design for all applicants.
- Groups 10 – 74: minimum 10 approved applications to get Simplified Issue. Employer must contribute at least $25 or 25% of defined plan design monthly to get Simplified Issue. Spouses can qualify for SI if employer contributes for them.
- Groups 75 – 499: can be voluntary, no employer contribution required; minimum 10 approved applications to get SI
- Groups 500+: voluntary, 25 approved apps to get SI
- All multi-life groups get the multi-life premiums; employees or spouses for whom employer contributes the minimum for each group size, get an additional 5% discount.
- Additional discounts apply in most states for having a spouse/partner whether they apply or not, and a larger discount if spouse/partner applies and is accepted
The insurance company for this excellent simplified underwriting program is LifeSecure, a wholly owned subsidiary of Blue Cross/Blue Shield of Michigan. The benefits are easy for consumers to understand and the rates are very competitive, particularly in California. It is also available to individuals on a fully-underwritten basis.
In today’s uncertain economy, you have a duty to discuss the need for long-term care planning with every client. Tax-free benefits are always in play for any consumer who purchases a traditional long-term care insurance policy. Tax-deductible premiums are of great value to nearly every business owner, and simplified underwriting for employer groups with three or more employees sweetens the pot.
Take this good news out to your clients; they’ll thank you for it.