Long-Term Care
Like many aspects of life, most people close the barn door after the horse has left. The same thing takes place with Long-Term Care planning. All statistics show that one out of two people (50 percent) will need some Long-Term care, yet most people want to buy the insurance moments before entering the assisted living facility. At that point, it is too late and too expensive. Funny, you have less than ¼ of 1 percent chance your house will burn down, but you buy fire insurance coverage. Long-Term care can average $72,000 to $100,000 per year and you have a 50 percent chance of needing it; yet, very few people protect against this risk.
One way to minimize the costs is by setting up a side business as a “C” corporation. The C corporation can establish a long-term care benefit plan for the owners and chosen employees. Due to the government’s interest in having people covered privately for long-term care needs, the normal rules that prevent discrimination in benefit plans have been waived. This means that the business owner can provide a long-term care benefit for himself and his family (who are either employees or directors of the company), and deduct the entire premium for the long-term care policy without regard to the IRS discrimination rules.
Obtaining a tax deduction on the long-term care premium lowers the cost of having this coverage, thus making the choice of acquiring long-term care insurance that much more attractive.