Long Term Care Tax Benefits for Small & Large Businesses
Understanding the ins and outs of insurance plans & premiums as an individual can be
overwhelming. We sort through piles of papers for home-owners, car and health insurance,
and for many of us, long term care insurance too. For business owners, the challenge isn’t
insuring ourselves and our family though, but our employees. Sole Proprietors,
Partnerships, C & S Corporations or Limited Liability Corporations all have to deal with the
inevitable issue of offering some type of insurance for employees. Considering the cost of
insurance, this is not a very welcome task these days.
Thankfully, the government does provide some assistance in the form of tax benefits for
business owners. The chart below outlines premium deductibility percentages for all types
of businesses that offer long term care insurance coverage for their employees:
Types Of Business Circumstance Deductibility
Employer pays premiums for Employer deducts 100% of premium
Sole Proprietor employees’ policies expense.
Premiums paid by employer not included in
employee’s taxable income. Benefits
received from policy not included in
recipient’s taxable income.
Sole Proprietor pays Deducts lesser of actual premiums paid
premiums for own policy. and eligible long-term care insurance
premium (see chart below)1. Benefits received
from policy not included in recipient’s
taxable income.
Employer pays premiums for Employer deducts 100% of premium
Partnership employee’s policies. expense.
Premiums paid by employer not included in
employee’s taxable income. Benefits
received from policy not included in
recipient’s taxable income.
Partnership pays premiums for Premiums attributed to each partner
partners’ policies. included in their income.
Partner deducts lesser of actual premiums
paid and eligible long-term care insurance
premium (see chart)2. Benefits received from
policy not included in recipient’s taxable
income.
C Corporation (includes charities) Employer pays premiums for Employer deducts 100% of premium
employee policies. expense.
Premiums paid by employer not included in
employee’s taxable income.
Benefits received from policy not included
in recipient’s taxable income.

Employer pays premiums for Employer deducts 100% of premium
S Corporation employee’s policies (including 2% expense. Premium paid by employer not
and less shareholders). included in taxable income. Benefits
received from policy not included in
recipient’s taxable income.
S Corporation pays premiums for Premiums attributed to each greater than
greater than 2% employee or 2% employee or shareholder are included
shareholders’ policies. in their income. Greater than 2%
shareholder deducts lesser of actual
premiums paid and eligible long-term care
insurance premium (see chart below)3.
Benefits received from policy not included
in recipient's taxable income.
Limited Liability Employer pays premium for Employer deducts 100% of premium
employee’s policies. expense.
Premiums paid by employer not included in
employee’s taxable income.
Benefits received from policy not included in
recipient’s taxable income.
Corporation LLC pays premiums for Premiums attributed to each owner/member
owner/members’ policies. included in their income. Owner/member
deducts
lesser of actual premiums paid and eligible
long term
care insurance premium (see chart below)3.
Benefits received from policy not included in
recipient’s taxable income.
Current tax law generally allows deductibility of qualified long-term care insurance premiums paid for policies covering an individual,
his or her spouse,and dependents (when paid for outright or received in connection with employment). References under the
“Circumstance”column to “Employer” and “Employee” refer to long-term care insurance premiums paid in the employment context
as an employee benefit.
2 IRC Sec. 162(1)(1)(B), Rev. Rul. 91-26, 1991-15 I.R.B. 23
3 IRC Sec. 162 (1)(1)(B), Rev. Rul, 91-26, 1991-15 I.R.B. 23
4 IRC Sec. 162(1)(1)(B), Rev. Rul. 91-26, 1991-15 I.R.B. 23
2008 Eligible Long Term Care Insurance Premiums Age-Based Deduction
Limits
Age Amount Deductible
40 or under $310
41 through 50 $580
51 through 60 $1,150
61 through 70 $3,080
71 and above $3,850

LTC Connects takes a different approach to long term care. Our goal is to connect you
with information so you can best decide if long term care makes sense for you. Whether
you are an individual, small or large business, visit http://www.ltcconnects.com to learn
more about LTC and to find a long term care insurance policy that is customized to fit your
needs.