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Long term care for public sector employees


Guest Lifeplancoordinator
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Guest Lifeplancoordinator

Hello. I am very familiar with the tax codes related to the private sector however, I have an opportunity to work with the public sector now. I am wondering if a town is able to write off the LTC premiums paid for employees just like a business.

Any help would be appreciated.

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Guest matthew222

Yes, but if individuals are contributing to the coverage at all, premiums can't be pre-tax.

On a side note, LTC is losing a little of its luster though.

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Guest Lifeplancoordinator

Thank you for the reply. Where can I find specific tax language to support that?

With regard to LTC losing its luster, I'm not sure I agree. I deal with boh sides of the fence of those who have and those that don't. The ones that don't, and have assets, are the ones who's families tend to suffer.

I would love to hear your thoughts on this. Conversation on tjis topic is always helpful to me.

Thanks and any help to find that tax language would be appreciated.

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Guest Lifeplancoordinator

Thanks for the response. However, and please correct me if I'm wrong, but the footnote states, "1 The following are not qualified benefits: products advertised, marketed, or offered as long-term care insurance".

I think this states that it cannot be a write- off under a cafeteria plan. However, this really wouldn't be one. This would be a fringe benefit to certain employees.

The benefit to the town is that they can offer an important benefit to employees. The benefit not only can protect the individual but it can also be seen as a proactive step towards preventing an immediate (or potentially any) spend down.

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Matthew wrote: "Yes, but if individuals are contributing to the coverage at all, premiums can't be pre-tax." That is based on section 125(f) because section 125 is the avenue for so-called "pre-tax" payment of premiums by employees. You report that individuals are not contributing to the premiums. Section 125 does not apply and matthew's comment does not apply.

I asked about write-off. "Write-off" can mean "deduct." A town generally does not pay income taxes, so deductions are not an issue.

I still don't understand what you mean by "write-off" or what you mean by "preventing an immediate (or potentially any) spend down." Since I can respond only with respect to federal income tax issues, it does not matter to me what else you mean because I cannot comment one way or another. I can only caution that towns can do only what the applicable state and local law enable towns to do.

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Guest Lifeplancoordinator

Okay. I was simply trying to determine if a town offering a benefit to employees without them contributing to it could write off the associated cost similar to an S Corp / LLC / C Corp.

Thanks again.

Update: if the town does not pay taxes I'm assuming that they cannot use the tax benefit.

Thanks for the feedback. I'll be sure to use this board for other benefit questions.

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Guest matthew222

Sorry that I didn't see that the LTC premiums you were referring to was for a town. Business can deduct insurance premiums, but in this case, it obviously doesn't apply. In regards to my previous response, I was just saying that the benefit cannot be run through a Section 125 plan.

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Write off, in the broad sense, means deduct as an expenditure.

It is the same treatment whether for a town or for a business.

Both are deducting an expenditure from income/revenue.

Whether the expenditure is an expense is another issue.

The only difference is that the business pays taxes on any suplus whereas the town only records a budget surplus or deficit.

Concern with "write off" serves no rational purpose.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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  • 2 years later...
Guest merkramirez

Hello. I can see that this post is rather two years old now. But I still would like to contribute some things. My experience as a long-term care insurance writer at ACSIA has helped me to learn as many things that I can learn.

Regarding your question, yes. Public offices can write off LTC premiums as much as any private business. However, I think that there are limited things that a public employee can't have as compared to individuals paying their own insurance. As said by the other users, the policy paid in this manner are not subject to tax exemptions.

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