Deductibles from Long Term Care Insurance
Long term care insurance makes receiving long term care and asset preservation at the same time possible amidst the economy’s continuous downturn. Aside from alleviating the cost of care, many wonder and ask is long term care insurance tax deductible?
The answer is yes. Premiums that are paid for a tax qualified long term care insurance (LTCI) policy can be itemized on the Form 1040 Schedule A of an insured individual for these are considered medical expenses and thus deductible from his income tax at the end of the taxable year.
The amount of LTCI premiums that can be deducted from an insured person’s income tax shall depend on his age at the closing of the taxable year, as the Internal Revenue Service has set deductibility limitations based on age groups under the Internal Revenue Code Section 213(d)(10).
According to Section 213(d)(10), LTCI policyholders 40 years old or younger can receive up to $340 deductions on their taxes. Meanwhile, insured individuals who are more than 40 years old but younger than 50 can have up to $640 of their paid premiums deducted from their income tax.
As one gets older his LTCI premiums that will be treated as deductions go up.
For instance, a 55-year-old policyholder can receive a total deduction of $1,270 while those over 60 but younger than 70 can have a deduction that will not exceed $3,390. Insured individuals over the age of 70, on the other hand, will get a deduction that amounts to $4,240.
Even if the premiums that you paid are for the tax-qualified LTCI policies of your spouse, parents, or children these are counted as personal medical expenses and thus deductible. However, any amount of your paid premiums that exceed the deductible limits will no longer be considered medical expenses.
Is Long Term Care Insurance Tax Deductible?
It pays to know and understand the differences between a tax qualified LTCI policy and a non-tax qualified LTCI policy before deciding to buy.
While an LTCI policy is a sound investment, the premium that you will have to pay every year until a benefit trigger occurs and qualifies you for long term care is not easy on the pocket.
Apart from knowing that his family will never have to suffer financially, emotionally and physically should he need care in the future, the chunk of tax deductions is another consolation to a policyholder who religiously pays his annual premium no matter how high it is.
Tax qualified LTCI policies allow huge deductibles which many Americans find very beneficial especially these days when maintaining a daily budget entails so much effort already. Non-tax qualified policies do not offer the same thing, not to mention these are more expensive as they have lesser restrictions.
Are you among those who are asking is long term care insurance tax deductible? If so, perhaps a tax qualified policy will work for you. Take time to discuss this and long term care quotes with your insurance agent who is affiliated with major LTCI carriers.
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