Insured Individuals Have Been Enjoying Lower Taxes
In his speech, presidential candidate Mitt Romney said tax reduction is among his plans for America. However, individuals with long term care insurance (LTCI) have been counting years of long term care tax deduction already.
Perhaps he can think of something else that will be more valuable especially to the health care needs of the elderly and disabled individuals.
Long term care (LTC) costs are going up at a fast rate and so everybody is pressured to come up with a plan that will protect his finances should he wind up needing care someday. Of all the choices available, LTCI is no doubt the most ideal platform as this insurance product serves as a ticket to quality LTC and asset protection.
By clinching an LTCI policy you get to enjoy big tax breaks for as long as you pay your premium religiously. Premiums that are paid into tax qualified LTCI policies are treated as medical expenses according to the IRS Code Section 213(d). The amount of one’s LTCI premium that will be treated as a medical expense and thus deductible from his total taxes for the year shall be based on his age.
For instance, an insured taxpayer turned 55 years old before the closing of the taxable year so his LTCI premium worth $1,310 shall be treated as a deductible along with his other itemized deductions. Every year, the amount of his LTCI premium that shall be eligible for deduction will increase to keep up with inflation.
Exclusive Long Term Care Tax Deduction for LTCI Policyholders
This tax incentive is only exclusive to individuals who have planned their LTC via LTCI policies. Those who planned their future health care needs via reverse mortgages, life insurance with LTC rider, and annuities among others won’t have the privilege to enjoy this tax perk.
Long term care (LTC) costs are increasing every year while the population that is expecting care grows ceaselessly. Half of the country’s population is actually dependent on Medicaid for their LTC needs. Should the cost of care shoot up four times more in 2030 how else can Medicaid divide its limited budget among its beneficiaries? By purchasing an LTCI policy you instantly have your future health care needs covered, plus you are able to help the government that is s clinging on by its fingernails.
Individuals without LTCI policies can also have the opportunity to enjoy tax breaks but these will come later when they actually begin to acquire care and their total LTC expenses exceed 7..5% of their adjusted gross income. But why wait for an event to trigger the need for care so you can reduce your taxes when you can avail tax breaks right now?
Under the IRS Code Section 213 (d), even if the annual premium that you are paying is for the LTCI coverage of your child, parents or spouse it shall be credited to your deductible.
Long term care tax deduction is worth studying and appreciating as the cost of care will continue to rise in the years to come. For helpful advice, contact an insurance agent in your area who is affiliated with major LTCI carriers.
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