Why Advisors Should Pitch Traditional LTC Insurance to Small Business Owners Before Year-End

With 2025 winding down, small business owners have a narrow window to lock in powerful tax savings through traditional long-term care (LTC) insurance. Unlike hybrid policies or self-insurance, traditional LTC provides dedicated, tax-qualified coverage for nursing homes, assisted living, or in-home care—benefits are received tax-free. For advisors, this is a prime opportunity to protect clients’ wealth and leverage their business structure for immediate tax relief.

Why Small Business Owners Need This Conversation

Small business owners often lack corporate benefits and reinvest profits, leaving them exposed to LTC costs that can exceed $100,000 annually. Traditional LTC insurance shields personal and business assets while offering unique tax advantages unavailable to W-2 employees.

The Tax Edge: Deductibility, Spousal Coverage, and Discrimination

Under IRS rules, premiums for tax-qualified traditional LTC policies are deductible as a business expense or above-the-line adjustment—without itemizing. The real power lies in flexibility:

• C-Corporations: Deduct 100% of premiums with no age limits for owner-employees, spouses, and dependents. Premiums are excluded from employee income, and plans can discriminate—covering only owners or key personnel without offering to all staff.

• S-Corps, Partnerships, LLCs, Sole Props: More-than-2% owners deduct premiums above-the-line (up to IRS age-based limits). Critically, spouses and dependents qualify, even if not employed by the business.

Act Now: Year-End Tax Savings + Rate Locks

Premiums paid by December 31, 2025, reduce this year’s taxable income, providing immediate financial benefits. Delay means forfeiting 2025 deductions—potentially thousands in lost savings, especially for high earners.

Rates are based on current age and health. Waiting until 2026 increases premiums and risks insurability.

Your Role

Review clients’ entity type, estimate spousal-inclusive deductions, and connect with LTC specialists. A 15-minute discussion can secure tax savings, protect legacies, and deepen relationships.

Bottom line: Traditional LTC insurance turns a future risk into a 2025 tax win—especially for owners who can cover spouses and discriminate. Don’t let the year end without this conversation.