Executive Carveout for Long-Term Care Insurance

C Corporations can create an “Executive Carveout Plan” whereby a business owner may favor selected employees for certain benefits and exclude others. Spouses and dependents of these “key” employees generally are granted the same tax advantage.
• Employer provided Long Term Care insurance is treated as an accident & health plan
• Premiums are fully deductible for bona fide employees
• Premiums are excluded from employee’s income
• Benefits, when received, are income tax free
• Total premiums are not subject to FICA
• Employee can own the policy