are long term care policies tax deductible
Long-Term Care Riders. A qualified long-term care insurance rider attached to a life insurance policy satisfies Section 7702B of the tax code. The benefit amount is known at the time of policy issue and unlike 101(g), riders pay for both temporary and permanent benefits. The deduction for eligible long-term care premiums that are paid during any taxable year for a qualified long-term care insurance contract as defined in IRC Section 7702B(b) is subject to an additional dollar amount limit that increases with the age of the insured individual. Are premiums paid for a qualified long-term care insurance contract deductible as medical expenses? Amounts paid for any qualified long-term care insurance contract or for qualified long-term care services generally are included in the definition of medical care and, thus, are eligible for income tax deduction, subject to certain limitations. Policies offering an Accelerated Death Benefit for Chronic Illness rider do so through Section 101(g). Accelerated death benefit riders cannot be marketed as long-term care insurance. A physician does have to certify the chronic illness is non-recoverable and will likely last for the rest of an individual’s life. Long Term Care Insurance Tax Deductions for Individuals. Tax-qualified policies are considered medical expenses. For an individual who itemizes income tax deductions, long-term care insurance premiums are tax deductible to the extent the premiums exceed 10 % of an individual's adjusted gross income (AGI). A tax deduction is allowed for the LTC insurance premium paid by a taxpayer for long term care insurance which is for the benefit of the taxpayer; a dependent of the taxpayer; or an employee of a taxpayer. The amount can be deducted from taxable income to the extent the premium is not otherwise deducted by taxpayer. Another change announced by the IRS involves benefits from per diem or indemnity policies, which pay a predetermined amount each day. These benefits are not included in income except amounts that exceed the beneficiary's total qualified long-term care expenses or $340 per day, whichever is greater. IRS Issues Long-Term Care Premium Deductibility Limits for 2016. The Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2016 income as a result of buying long-term care insurance. The amount of premium paid for the coverage of the. individual, spouse and dependents may be deducted. to the extent that total medical expenses, including. the eligible long term care premium, exceeds 10% 1. of adjusted gross income (AGI). Benefits paid on a qualified LTCi policy to an. individual are not taxable income as long as benefit. payments above $360 per day do not exceed the. actual cost of care. 1 7.5% of AGI for tax years ending before January 1, 2017. if the taxpayer or the taxpayer’s spouse has attained age. Premiums for qualified long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured's adjusted gross income, or 7.5 percent for taxpayers 65 and older (through 2016).
Yes, Long Term Care Insurance Tax Deductions for Individuals.