Lecture 14 Other Group Insurance BenefitsGroup Dental InsuranceGroup Dental Insurance ExamplesGroup Long-Term Care InsuranceGroup Long-Term Care PoliciesGroup Long-Term Care Policies - (cont.)Group Legal Expense PlansGroup Property-Liability InsuranceVoluntary BenefitsLecture 14Other Group Insurance Benefits•Dental Insurance•Long-Term Care Insurance•Legal Expense Insurance•Property-Liability Insurance•Voluntary BenefitsGroup 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 employersGroup Dental InsuranceExamplesCost of plan: $200/yearExpected 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)Alternatives Emp. 1 Emp. 2Compensation 200 200Fed./State Taxes 68 36Soc. Sec. Taxes 15.30 15.30After Tax Income 116.70 148.70Dental Care Cost 150 ?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 facilitiesGroup 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 careGroup 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 renewableGroup 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 defenseGroup 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 liabilityVoluntary 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