Long Term Care Insurance as an employee benefit -- Can the employer di

[Guest Georgia Irwin]

Can an employer offer LTC insurance to a select group of employees only? i.e., can you discriminate? I've done some research and it appears that you can but would like to know if anyone else has researched this issue and come to the same conclusion.

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[This message has been edited by georgia Irwin (edited 02-03-2000).]

[Guest KingMM]

You can "discriminate" as long as the group of employees are classed separately and all in that group (ie: managers) are treated the same.

[Guest SHM]

For those of you who have looked at this issue before, can you share some support/citation for this proposition?

[J Simmons]

You are asking for a citation to a negative proposition--for a citation that HCE-NHCE nondiscrimination does not apply to employer-provided long-term care insurance. Maybe your question could be turned around to what citation is there to HCE-NHCE nondiscrimination applying to employer-provided long-term care insurance.

Check section 106(a) and 106©. You'll see that nowhere is HCE-NHCE nondiscrimination made a requirement.

Generalized discrimination principles, race, gender, disability, pregnancy, etc. must however not be the basis of your cut between employees for whom it will be provided and those for whom it will not.

[Guest Sieve]

Well, here's a shot at finding more authority for the negative proposition (usually an excercise in futility) . . .

Under IRC Section 7702B(a), long-term care insurance is treated as any other health and accident contract (IRC Section 7702(b)(a)(1)): i.e., among other things, premiums paid by the employer are not includable in income (IRC Sections 7702B(a)(3) & 106(a)) and amounts received through the insurance policy as an employee are considered payments for personal injury or sickness and are not includable in income (IRC Sections 105(b) & 7702B(a)(2)). And--here's comes the somewhat fluffy part--because there are no non-discrimination provisions which apply to health and accident plans (other than those plans which are self-insured--IRC Section 105(h)), then offering LTC coverage only to certain employees, or only to certain groups of employees, is OK (a technical term!!).

Some us around here remember IRC Section 89 (Remember the Alamo!), an attempt to apply non-discrimination standards to all health plans. It was enacted as part of TRA '86 (10/22/1986), then was repealed on 11/9/1989. The repeal was effective as if included in the provision of TRA '86 which enacted it--i.e., Section 89 never took effect. (I wonder if it ever even existed . . .) It's true -- you could look it up!! That's why we know that health coverage can be disriminatory--because the legislative attempt to impose discrimination rules never got out of its own starting gate.

[Guest SHM]

Many thanks!

[Guest JesseSlome]

We prefer not to use the word discriminate but employers can carve out specific groups of employees and can use some fairly diverse ways to do this. For example, say you want to just include older employees who have been with the company for a period of years. Use a point system with one point for each year of age plus one point for years or service with a minimum of 60 points needed to qualify.

There is a wealth of information on the American Association for Long-Term Care Insurance's website American Association for Long-Term Care Insurance

To read complete rules for long-term care insurance tax deductibility, here is a good link: Long-Term Care Insurance Tax

Jesse Slome

Executive Director

American Association for Long-Term Care Insurance

http://www.aaltci.org/long-term-care-insurance/

[401 Chaos]

So, what about not only discriminating by paying for long-term care insurance for an executive group (line drawn solely on basis of position w/out regard to impermissible discrimination factors) as well as for their spouses. Are the emounts paid for LTC insurance on behalf of spouses deductible / not included in income as well? Seems that is generally doable with regular health insurance arrangements covering dependents so should extend to long term care insurance as well. Thoughts?

[Guest taylorjeff]

Payment of LTC premiums for employees & spouses are treated the same as other health insurance benefits. Executive group must be employees, not just shareholders. Full premium is deductible not just age based eligible premium.

So, what about not only discriminating by paying for long-term care insurance for an executive group (line drawn solely on basis of position w/out regard to impermissible discrimination factors) as well as for their spouses. Are the emounts paid for LTC insurance on behalf of spouses deductible / not included in income as well? Seems that is generally doable with regular health insurance arrangements covering dependents so should extend to long term care insurance as well. Thoughts?

[alexa]

How would the new Health Care nondiscrimination rules on fully insured plans affect offering LTC plans to employees at grade level 18 and above (typically earn over the HCE comp limit)

[Guest merkramirez]

Discriminating is such a strong word and I suggest that we replace it with the words "favoring"

However, all in all, any employer can "favor" a certain group of people more than the other about long-term care insurance as long as the reason behind it is purely professional. If an employee is a member of the company's A-team, then I see no reason why the employer should not favor them in return. If the act of favoring though is based only on gender and race, I think that you might have a management issue that can be resolved internally.