Tax Deductible Long-Term Care Insurance,
One of the Great Overlooked Benefits for Businesses
Many people are surprised to learn that premiums for long-term care insurance may be FEDERALLY tax deductible. And, some 30 states offer some type of tax deduction or credit. The rules are pretty specific and we won't give tax advice here. For that, consult with your CPA. However, here are some key things you should know.
✓ TAX DEDUCTIBILITY IS A SIGNIFICANT BENEFIT - It means that a portion (maybe even all) of the premium you pay for long-term care insurance coverage can be tax deductible.
✓ EVEN BETTER - If you ever go on claim and the policy pays benefits, these may be received totally tax-free.
✓ BUSINESSES CAN BENEFIT - Especially small businesses that choose to create what's called a 'carve out' plan. These plans select who is covered and premiums can be paid by the business.
✓ NOT ALL LONG-TERM CARE POLICIES MEET TAX DEDUCTIBLE QUALIFICATIONS - This is an important point and a reason to work with a knowledgeable long-term care insurance professional.
✓ SOME LINKED BENEFIT POLICIES CAN MEET TAX DEDUCTIBLE RULES - Today, linked-benefit long-term care is a popular choice. These tend to be life insurance policies combined with an LTC benefit. NOT ALL linked benefit policies meet the qualifications to be tax deductible.
✓ THERE ARE WAYS TO MAXIMIZE YOUR TAX SAVINGS - A busines owner can get coverage starting at age 55 and take advantage of a provision where premiums stop ar age 65. Or, adding an 'inflation growth option' to a linked-benefit policy can get you greater tax deductibility. These are all strategies that a long-term care insurance specialist can explore with you.
GET A QUOTE AND INFORMATION FROM ONE LONG-TERM CARE INSURANCE SPECIALIST
A long-term care specialist can speak with you over the phone and share costs and information using screen sharing. There is (of course) no cost and no obligation.
Call the American Association for Long-Term Care Insurance at 818-597-3227 (bet. 9 AM and 3 PM Pacific Time).
We can answer general questions and connect you with ONE long-term care specialist who is experienced and knowledgeable with BOTH traditional LTC insurance as well as Linked Benefit policies.
OR - IF YOU PREFER - COMPLETE OUR ONLINE REQUEST A QUOTE FORM
Click This Link & Provide Your Contact Information
Tax Deductibility Limits for Individuals
Each year the IRS issues tax limits that apply to individuals and certain forms of business entities. Discuss this with the specialist and/or your CPA.
2022 Long Term Care Insurance Federal Tax Deductible Limits (Table 1)
| Taxpayer's Age At End of Tax Year - Deductible Limit | ||
|---|---|---|
| 40 or less | $ 450 | |
| More than 40 but not more than 50 | $ 850 | |
| More than 50 but not more than 60 | $1,690 | |
| More than 60 but not more than 70 | $4,510 | |
| More than 70 | $5,640 | |
The Qualified Long-Term Care Insurance Contract or Life Insurance Contract Per Diem Limitation dollar limit on the benefits is $390 per day.
Source: IRS Revenue Procedure: 2021-45
2021 Long Term Care Insurance Federal Tax Deductible Limits (Table 1)
| Taxpayer's Age At End of Tax Year - Deductible Limit | ||
|---|---|---|
| 40 or less | $ 450 | |
| More than 40 but not more than 50 | $ 850 | |
| More than 50 but not more than 60 | $1,690 | |
| More than 60 but not more than 70 | $4,520 | |
| More than 70 | $5,640 | |
The Qualified Long-Term Care Insurance Contract or Life Insurance Contract Per Diem Limitation dollar limit on the benefits increased is $400 per day.
Source: IRS Revenue Procedure: 2020-45
WHY A LONG-TERM CARE INSURANCE SPECIALIST BENEFITS YOU
You ONLY BUY A LONG-TERM CARE INSURANCE POLICY ONE TIME. Switching almost never pays.So, you need to do it right the first time. A long-term care insurance specialist should represent multiple leading insurers. He or she will know the policies - the pros and cons (it's NOT just about pricing). They will not present a 'ONE SIZE FITS ALL' solution.
If you'd like to know more, call the American Association for Long-Term Care Insurance at 818-597-3227 (bet. 9 AM and 3 PM Pacific Time).
We can answer general questions and connect you with ONE long-term care specialist.
Want Additional Tax Deductibility Rules
Consult the IRS guide. Click here to open the IRS guide on tax deductibilty rules.