Deducting Medical Insurance
For 2012, you are not required by federal law to provide medical insurance for employees (there are some state mandates). According to a study from the Kaiser Family Foundation released in September 2011, 48% of all small businesses with 3 to 9 employees offer this benefit to their employees. But 71% of those with 10 to 24 employees, 85% for firms with 25 to 49 employees, and 93% of companies with more than 50 employees offer health coverage. If you choose to provide medical insurance, you can deduct the cost of their group hospitalization and medical insurance. Deductible medical coverage also includes premiums for long-term care insurance.
Long-term care insurance
An insurance contract that provides coverage for long-term care services necessary for diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, as well as maintenance or personal care services required by a chronically ill person and provided pursuant to a plan of care prescribed by a licensed health care practitioner.
To be deductible, long-term care insurance must:
- Be guaranteed renewable.
- Not provide for a cash surrender value or other money that can be repaid, assigned, pledged, or borrowed.
- Provide that refunds of premiums, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used to reduce future premiums or increase future benefits.
- Not pay or reimburse ...