Tax Advantages

Long Term Care Insurance Tax Deduction

Tax-Qualified Long Term Care Insurance

Tax Deductible Premiums

Current tax laws 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.

Tax Advantages for Individuals and Businesses

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.