Lecture 14 Other Group Insurance Benefits

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Lecture 14Other Group Insurance Benefits

• Dental Insurance
• Long-Term Care Insurance
• Legal Expense Insurance
• Property-Liability Insurance
• Voluntary Benefits

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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

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Group Dental InsuranceExamples

• Cost of plan 200/year
• Expected benefits 150/year (range 0-1000)
• Employee 1 60,000 salary 34 tax rate (FS)
• Employee 2 15,000 salary 18 tax rate (FS)

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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
• 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

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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
• Skilled nursing care
• Intermediate care
• Custodial care
• Home health care
• Adult day care

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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

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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
• Consultation
• Preparation of documents
• Adoption
• Bankruptcy
• Defense of civil suits
• Juvenile delinquency
• Domestic problems
• Criminal defense

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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

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Voluntary Benefits

• Employee pays 100 of premiums
• Reasons for growth
• Cost control
• Supplementary coverage
• Changing demographics
• Increased availability
• Types of products
• Life Disability
• Dread disease policies Dental
• Prescription drug Vision
• Long-term care Property-liability
• Underwriting
• Cost