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TRUSTED INSURANCE CARRIERS

Mutual of Omaha long term care insurance quote.
Transamerica retirement planning.
Nationwide insurance for long term care.
OneAmerica long term care insurance and retirement planning..
Minnesota life insurance from Securian Financial.
Lincoln Financial MoneyGuard long term care insurance.

Long Term Care Insurance Tax Deductions

Tax-Qualified Long Term Care Insurance

Tax Deductible Premiums

Long term care insurance tax deductionsCurrent long term care insurance tax deductions allow for the deduction of either the actual premium or the eligible premium paid on a tax-qualified long-term care insurance policy.

  • Actual premium is the actual amount of premium paid
  • Eligible premium is an amount determined annually by the federal government based on the medical care components of the Consumer Price Index and the age of the policyholder

Tax-Free Benefits

The benefits paid by a tax-qualified long-term care insurance policy are intended to be tax free as long as they do not exceed the greater of:

  • Qualified long-term care daily expenses, or
  • The per-day limitation, which is $370 in 2019

Source: Section 7702B of the Internal Revenue Code (IRC)

Deductible Out-of-Pocket Expenses

Generally, any long-term care expense paid out-of-pocket may be claimed as a medical deduction on a federal income tax return. The only exception is payment for home care provided by a family member who is not a licensed health-care professional.

State Tax Deductions

Currently a number of states offer tax deductions and/or credits for people who purchase tax-qualified long-term care policies. These state deductions and credits are in addition to those offered by the federal government.

Eligible Premium Guidelines for 2019
At age: You can deduct:
40 and younger $420
41-50 $790
51-60 $1,580
61-70 $4,220
71 and older $5,270

Source: IRS Revenue Procedure 2018-57

LTC Insurance Tax Deductions for Individuals and Businesses

For Individuals

Eligible premium may be claimed as a medical expense in 2019 as long as:

• Combined medical expenses exceed 10 percent* of adjusted gross income, and
• Deductions are itemized on the federal income tax return

*Percentage may be subject to change.

For Self-Employed Business Owners

Sole Proprietor | Partnership | LLC |
S Corporation

Eligible premium may be tax deductible when the business purchases long-term care insurance policies for:

• Owner
• Spouse
• Dependents

Actual premium may be tax deductible when the business purchases long-term care insurance policies for:

• Employees

For Owners of
C Corporations

Actual premium may be tax deductible when the business purchases long-term care insurance policies for:

• Owner/Employee*
• Spouse
• Dependents
• Employees

*The officers and owners of C Corporations may be employees, which means premium paid by the corporation for tax-qualified LTCi (QLTC) policies may be deductible by the corporation and not taxable to the employees if the contributions are made pursuant to an employee benefit plan.

If the QLTC employee benefit plan is insured, it need not conform to non- discrimination rules and may be available only to a select class of employees (IRC Section 106). The corporation must be able to show that the plan covers owner- employees as employees and not as owners. QLTC coverage may not use salary reduction dollars to pay its premium contribution.

If premiums are paid in advance, such as in a short-pay situation, the amount and timing of the deduction currently is unclear. The client should consult a tax advisor.

We do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. We encourage you to consult your own tax, legal and accounting advisors.

Click below for more articles from this section:
  • Long Term Care Planning
  • Cost of Long Term Care By State
  • How LTC Insurance Works
  • Long Term Care Annuities (Hybrid LTC)
  • Life Insurance with Long Term Care (Hybrid LTC)
  • 1035 Exchanges for Life Insurance and Annuities
  • Long Term Care Insurance Costs
  • Long Term Care Insurance Tax Deductions
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