Transcript Lecture 14 Other Group Insurance Benefits

Lecture 14
Other Group Insurance Benefits
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Dental Insurance
Long-Term Care Insurance
Legal Expense Insurance
Property-Liability Insurance
Voluntary Benefits
Group Dental Insurance
• Taxation
– Same as other medical benefits
• Employer gets tax deduction for premiums
• Employee is not taxed on coverage or benefits
• Restricted coverage
– $500-2000/year or $1000-5000/lifetime
• Predictable expenses
– Exams, cleanings, fillings
• Why is it so popular?
– 60% of all employees
– 90% of large employers
Group Dental Insurance
Examples
Cost of plan:
$200/year
Expected benefits:
$150/year (range 0-1000)
Employee 1: $60,000 salary
34% tax rate (F+S)
Employee 2: $15,000 salary
18% tax rate (F+S)
Alt ernat ives
Emp. 1
Emp. 2
200
200
Fed./St at e Taxes
68
36
Soc. Sec. Taxes
15.30
15.30
Af t er Tax Income
116.70
148.70
Dent al Care Cost
150
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Compensat ion
Group Long-Term Care Insurance
• Taxation (starting in 1997)
– Employer gets tax deduction for premiums
– Employee is not taxed on coverage or benefits (except
if per diem exceeds $175 if excess of costs)
– Cannot be offered through tax favored cafeteria plan
– Cap on deductible long term care premiums (by age)
• Need for Long-term care
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Aging population
Cost of care ($30,000-50,000/year)
Lack of family care
Other policies exclude custodial care
• Sources of Long-term care
– Savings
– Medicaid (encourages dissipation of assets)
– Life care facilities
Group Long-Term Care Policies
• Eligibility for favorable tax treatment
• Eligibility for coverage
– Worker
– Spouse
– Other family members
• Cost
– Age based (starting age)
• Levels of care
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Skilled nursing care
Intermediate care
Custodial care
Home health care
Adult day care
Group Long-Term Care Policies (cont.)
• Benefits
– Specified dollar amount per day
– Increasing benefit levels (if indexed, capped)
– Duration
• Eligibility for benefits
– Previously - prior hospitalization
– Currently - Activities of Daily Living (ADL)
• Preexisting conditions
• Exclusions
• Renewability
– Guaranteed renewable
Group Legal Expense Plans
• Taxation
– Premiums up to $70/year not taxable to employee
• Authorizing legislation periodically expires
• Types of plans
– Closed panel
– Open panel
• Benefit schedules
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Consultation
Preparation of documents
Adoption
Bankruptcy
Defense of civil suits
Juvenile delinquency
Domestic problems
Criminal defense
Group Property-Liability
Insurance
• Taxation
– No favorable tax treatment
– Employer can deduct premiums, but they
represent taxable income to employees
– Employee cannot deduct premiums
• Types of coverages
– Auto
– Homeowners
– Umbrella liability
Voluntary Benefits
• Employee pays 100% of premiums
• Reasons for growth
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Cost control
Supplementary coverage
Changing demographics
Increased availability
• Types of products
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Life
Dread disease policies
Prescription drug
Long-term care
• Underwriting
• Cost
Disability
Dental
Vision
Property-liability