You may be able to deduct the cost (premiums paid) for long-term care insurance.
The IRS rules and limits vary. NOT all long-term care insurance policies are treated the same way.
The American Association for Long-Term Care Insurance does not give tax advice. The information contained here is provided as a general overview. Always speak to your CPA or tax advisor.
Traditional long-term care insurance policies are generally always 'tax-qualified'. The premiums paid meet the criteria for tax deductible allowances.
Many linked-benefit LTC policies sold today (2021) now offer some tax deductibility benefits. That was generally not true for policies sold in the past. However, only a portion of the premium you'll pay may count towards deductibility limits. We show several examples below.
Newer linked-benefit LTC policies offering some tax deductibility benefits may not be available in all states (such as California or New York). It is important to ask the agent or advisor you are working with.
TAX PLANNING TIP: The tax deductible portion is only applicable in years when you pay premiums. The tax benefits usually have greatest value at older ages (post-retirement) when income is generally lower and other health needs generate medical expenses that make it easier to reach the medical deduction limits.
Scroll down to see REAL EXAMPLES - Policy Pricing & Tax Deduction Information
Long-term care insurance tax deductibility yearly limits and rules
Click here to access yearly limits and IRS rules
Looking for a long-term care insurance specialist?
A long-term care insurance specialist can help you compare leading available LTC insurance policies - BOTH traditional and linked-benefit policies. These are independent brokers appointed with multiple companies who will educate you without any obligation (and at no cost).
Call the American Association for Long-Term Care Insurance 818-597-3227 - Between 9AM and 3PM Pacific Time - to be connected with ONE specialist for your area. Click Here to E-mail The Association. We'll Connect With ONE LTC Specialist
EXAMPLE A - "Traditional" long-term care insurance policy (premiums paid until a claim begins)
POLICY COST for a couple BOTH age 60
Policy Details: $4,500 monthly benefit / available pool of benefits = $164,000 for each
ANNUAL PREMIUM: $2,575 (2021 pricing, State of Illinois)
TAX DEDUCTIBLE PORTION OF THE PREMIUM: $2,575 *
* Basically, the full premium counts toward meeting the tax deductibility (Medical) threshold.
EXAMPLE B - "Traditional" long-term care insurance policy (premiums paid for 10 years only)
POLICY COST for a couple BOTH age 60
Policy Details: $4,500 monthly benefit / available pool of benefits = $164,000 for each
PREMIUM (10-Pay): $4,553 paid annually for 10 years (2021 pricing)
TAX DEDUCTIBLE PORTION OF THE PREMIUM: $4,553 *
* Basically, the full premium counts toward meeting the tax deductibility (Medical) threshold. This would be good for couple desiring tax benefits earlier.
EXAMPLE C - Company 1 - "Linked-benefit" life insurance + LTC benefit policy
POLICY COST for a couple BOTH age 60
Policy Details: $4,500 monthly benefit / available pool of benefits = $162,000 for each
PREMIUM (10-Pay): $18,392 paid annually for 10 years (2021 pricing)
TAX DEDUCTIBLE PORTION OF THE PREMIUM: $ 000 *
* NOT ALL linked-benefit long-term care insurance policies available currently meet the criteria to make some of the premiums you pay count towards your tax deductibility thresholds. It is therefore important to ask and see the information in writing on an illustration provided by the insurer.
EXAMPLE D - Company 2 "Linked-benefit" life insurance + LTC benefit policy
POLICY COST for a couple BOTH age 60
Policy Details: $4,500 monthly benefit / available pool of benefits = $162,000 for each
PREMIUM (10-Pay): $23,106 paid annually for 10 years
TAX DEDUCTIBLE PORTION OF THE PREMIUM: $4,350*
* A portion of the premiumn paid will count towards tax deductible eligibility.
EXAMPLE E - Company 3 "Linked-benefit" life insurance + LTC benefit policy
POLICY COST for a couple BOTH age 60
Policy Details: $4,500 monthly benefit / available pool of benefits = $162,000 for each
PREMIUM (10-Pay): $17,510 paid annually for 10 years
TAX DEDUCTIBLE PORTION OF THE PREMIUM: $1,627*
* A portion of the premiumn paid will count towards tax deductible eligibility.
Looking for a LTC insurance specialist who knows linked-benefit LTC?
A long-term care insurance specialist can help you compare leading available LTC insurance policies - BOTH traditional and linked-benefit policies. These are independent brokers appointed with multiple companies who will educate you without any obligation (and at no cost).
Call the American Association for Long-Term Care Insurance 818-597-3227 - Between 9AM and 3PM Pacific Time - to be connected with ONE specialist for your area. Click Here to E-mail The Association. We'll Connect With ONE LTC Specialist