Insurance Pitfalls to Dodge

March 2015 -

Dear Friends and Colleagues,

I would like to share with you some observations from a close business colleague of mine. Larry Thaul is the co-founder of Millenium Financial Inc. ( and someone I've come to know as an knowledgeable planner for business owners and professionals in these areas:

1.   Coordinating all employee and executive benefits for individuals, with an emphasis on current protections against disability, long-term care planning and sufficient/lifetime life insurance;

2.   Expert design of business insurance for key man, partner and entity buy-outs, and other strategies suitable for those in a state of change looking to protect their short- and long-term interests;

3.   Legacy planning and charitable giving programs.

In Larry's recent travels, he's seeing these three areas as ones to be sure you discuss with your clients:

1. Individual responsibility to have a medical plan or face a penalty

         - Get on this - it's the new reality!  

Information on the health insurance coverage of all Americans is reportable and now auto-generated by the taxing authorities. Similarly, associated penalties will be enforced for lack of coverage for those with incomes above applicable thresholds who are not otherwise exempt. Adults, children and seniors are all subject to this requirement unless specifically exempted (see IRS Health Coverage Exemptions Form 8965). Be sure you and your clients and their dependents have coverage that meets the minimum essential coverage standards required by the Affordable Care Act or under a policy that is grandfathered in.

See the IRS FAQ link on the Individual Shared Responsibility Provision:

Obtain a statement from your insurer or employer stating that such coverage is in place. Unqualified coverage does not suffice.

This IRS publication will assist in reporting and calculating the payment of any penalty due:

2. If you have Qualified Long-Term Care Insurance, now is the time to take your full or carry-forward 20% New York State tax credit.

Referencing NYS Department of Taxation and Finance instructions for Form IT-249, Claim for Long-Term Care Insurance Credit, and its instructions, Form IT-249-I: If you have a tax-qualified policy in the state of New York and have been paying premiums but not taking your credits annually, it is worth exploring how to take credit for premiums paid in 2014 and in prior years. Carry-forwards are indeed available, pursuant to instructions. This is in addition to any federal deductibility available by adding your tax-qualified policy premiums to your unreimbursed medical expenses to exceed 10% of AGI.

These credits make purchasing the policy more palatable and they certainly can make it easier to carry the policy in years with lower income or in full retirement. Planners agree that only a sustainable premium level, with anticipated increases, ought to be purchased in the first instance.

3. Imputed income must be picked up on certain life insurance plans, e.g., corporate-owned.

Corporate-owned policies designating employee-named personal beneficiaries carry tax ramifications for the beneficiary on payment of a death benefit. In most instances, income must be picked up by the employee on his/her return to preserve the tax-free status of the corporate-owned policy.

Please note that the information provided here is not tax advice, which can only be provided by a professional, credentialed practitioner.

If you have questions or comments, Larry can be reached at or 914-481-8306.

If you would like to discuss any other issues related to your practice or career, please don't hesitate to contact me. My direct line is (212) 490-9700. Or email me at  Absolute confidentiality always assured.

Robert Fligel

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