Clients who are retired public safety officers can purchase long-term care insurance and then use retirement funds to fund Continuation of Benefits coverage income-tax free.
Retired public safety officers can request up to $3,000 per year from their eligible government retirement plan to pay for tax-qualified long-term care (LTC) insurance premiums for themselves, their spouse or eligible dependents, according to the Pension Protection Act of 2006 (PPA). Payments must be made directly from the plan to the insurer, not to the individual.
This feature is available only with retirement plans that specifically offer this option.
Different plans may have different requirements.
If the participant pays the base policy premium directly, the COB payment may be by annual list bill. With list bill cases, policies must be issued on the first of the month.
Some plans may have multiple participants who choose to pay COB premiums from the plan. A multiple-policy list bill is monthly, but can be annually if all participants agree and all policies have the same anniversary date.
The base policy premium, when paid by a source other than the employer, can be any mode.
Some plans may require a letter of agreement with the plan; OneAmerica is willing to sign such a letter, subject to our review and approval.
Want to learn more? Check out our one page review of this funding solution.
Want more funding ideas? Check out our tax guide.