C-Corporations may generally deduct the entire premium paid for policies for employees, their spouses and dependents, retirees’, and retirees’ spouses, as a reasonable business expense. Long-term care insurance qualifies as an accident and health plan within the meaning of IRC Sections 105(b) and 106. The employer paid premiums are not considered as taxable income to those insureds.
Importantly, there is no requirement that coverage be provided on a non-discriminatory basis to all employees. The C-Corporation may, therefore, purchase a policy for certain key employees on a tax-deductible basis, and the key employee will not have to report this benefit as taxable income.
Note: Before making tax decisions about long-term care insurance it is essential that you consult with your attorney, accountant, or other tax professional, for advice regarding your own personal situation.
