The Deduction Most CPAs Are Missing
By Brian Wheeler, Director of Wealth Management & Business Brokerage
Tax-deductible premium… tax-free benefit?
It sounds like one of those ideas that’s too good to be real. But in the right structure, it exists. And most business owners—and frankly, most advisors, including CPAs—aren’t talking about it.
Where This Actually Shows Up
We spend a lot of time with business owners talking about:
- Reducing taxes
- Protecting wealth
- Creating flexibility down the road
What gets missed is how those three can sometimes work together in one decision. Long-term care planning is one of those areas. Not because it’s exciting—but because it’s often ignored until it becomes a problem.
A Different Way to Think About It
Instead of asking: “Should I buy long-term care insurance personally?”
There’s a better question: “Is there a smarter way to fund this through the business?”
In certain cases—particularly with C-Corporation structures—the answer can be yes.
A real example e recently reviewed a case involving:
- 59-year-old business owner
- Premium: ~$51,000/year for 5 years
Here’s where it gets interesting:
- $44,000 per year was deductible to the business
- No taxable income to the owner/employee
Let that sink in for a moment.
The business funds the premium, takes the deduction, and the individual isn’t taxed on the benefit.
What Does That Actually Buy?
By age 85:
- $2.9 million in tax-free long-term care benefits
And if care is never needed?
- The premiums paid (~$259,000 total)
- Convert into a tax-free death benefit to beneficiaries
No market risk. No “use it or lose it.” Just a different way to think about protecting future costs.
“But I Don’t Have a C-Corp…”
That’s usually the first reaction. And it’s fair—most closely held businesses are S-Corps.
But here’s where it gets more practical:
Some owners already have management or service entities taxed as C-Corps.
Others may have planning opportunities depending on their structure.
In certain cases, this can also be used as a retention strategy for key employees.
Think of it as more efficient alternative to cash compensation— one that protects the employee and creates tax leverage for the business.
Why This Gets Missed
It sits in the gap between:
- tax planning
- insurance planning
- long-term wealth strategy
Which means it often falls into the category of: “Everyone kind of knows about it… but no one is actually implementing it.”
Final Thought
This isn’t for everyone. But it’s a good example of a broader idea:
Sometimes the most valuable planning opportunities aren’t about finding new investments…
They’re about using the structure you already have more effectively.
If you’re curious whether something like this could apply to your situation, we’re happy to take a look.
No pressure—just a conversation to see if it fits.