By Harish Thadhani, Long Term Care Insurance Specialist

One of the most common problems we face in the insurance industry is being able to offer our clients quality benefits at a reasonable price. We often find our clients not adequately insured because of the high cost of certain plans. Trying to protect a client from a catastrophic or disabling loss has always been a problem. Physicians really need to deduct the premiums for a disability income plan because the cost is so high but that makes the benefit totally taxable. As an example, a physician who earns $12,500 per month can qualify for 70% of their monthly income ($8,750 per month). If the physician deducted the premium the after tax benefit would be $6,125 per month. Not enough to cover their mortgage expenses, children’s educational costs, vehicle payments, property taxes, insurance costs, medical expense, regular living expenses and the deductibles and coinsurance they incur monthly.

Finally we now have an alternative plan. A plan that is 100% tax deductible* for C-corporations and the benefits received are tax free up to $7,500 per month. Imagine deducting the premiums then receiving the benefits tax free when you need them the most. Introducing long term cash insurance.

Unlike other insurance policies for long term care, two insurance companies offer physicians cash benefits. Not reimbursement or indemnity plans that require services rendered and only pay for services performed on a daily basis, these plans pay cash. MedAmerica Insurance Company and MetLife are the only companies who offer truly cash benefits for long term care. The MedAmerica cash plan has no restrictions, limitations or exclusions contained in their program. This long term cash plan is a tax qualified LTC plan so it may be 100% deducted* by the corporation.

To qualify for benefits under this plan an individual would need to be unable to perform 2 out of 6 activities of daily living. These are the things we normally do in daily living for self care: bathing, continence, toileting, dressing, eating and transferring. Or any cognitive impairment would trigger benefits.

Long Term Cash plans unlike disability income plans do not limit benefits to a percentage of income, you may purchase up to $12,000 per month of benefit regardless of your income or the amount of disability insurance you currently have in force. Long Term Cash policies may continue past age 65 and have no age restrictions or employment restrictions to stay in effect. They are there when you need them the most. Long Term Cash plans have no financial qualifications. These plans are also PORTABLE. They can stay in effect even if a physician elects to stop practicing medicine. Plus these plans offer WORLDWIDE COVERAGE. Benefits are payable anywhere in the world. The physician can reside anywhere in the world and benefits are paid in cash, U.S. dollars, to the insured.

One other major factor is that these Long Term Cash plans can be purchased on the physician and their spouse, without including any other employee. The practice has the ability to choose who receives the program and still gets the tax deduction. The Health Insurance Portability and Accountability Act of 1996 permits this deduction.

The best way to summarize this plan is as follows:

• Plan may be purchased during the physicians high income years
• This plan is deductible as a business expense.
• Physicians may include coverage for a spouse.
• There is no imputed income to the physician for the benefit.
• Benefits up to $7,500 per month are totally tax free.*
• Discriminating participation is permitted. Employees are not required to participate.
• Worldwide coverage.
• 10 pay plans are available with no maximum deduction. (Policy paid up after 10 years).

Customers

• Companies and Organizations that have provided this program to their employees or endorsed for their policyholders
• Wellpoint Blue Cross Blue Shield – all employees
• Highmark Blue Cross Blue Shield – all employees and 3 million policyholders
• South Carolina Blue Cross Blue Shield – All Employees
• South Carolina State Employees Association – All State employees
• Alabama State Employees Association - All State employees
• State of Tennessee - All State employees
• Over 30 state Blue Cross Blue Shield affiliations

*Please consult a tax professional for advice on your own situation.