Naturally, peace of mind and protection of financial assets are among the top considerations when reviewing the benefits of long-term care insurance (LTCI). However, there is one benefit that you may be overlooking - the tax deductibility of LTCI.Though this benefit may not be as widely known as the more published benefits, the potential tax deduction can be substantial. For example, a couple with tax-qualified LTCI coverage could achieve a maximum deduction of $9,500 in 2015, and that number is scheduled to increase to $9,740 next year.
Tax-qualified long-term care insurance premiums are considered a medical expense and are treated accordingly under IRS rules. Medical expenses that exceed 10 percent of your Adjusted Gross Income (AGI) can be deducted. For individuals over the age of 65, the deductable amount is that which exceeds 7.5% of your AGI.
The tax-deductible limits for long-term care insurance premiums also vary based on the insured's attained age at the end of the tax year. However, it is worth noting that life insurance policies that include an LTCI benefit are generally not eligible for a tax deduction.
With the potential deductions available, be sure to include tax benefits in the conversations you have about long-term care insurance.
Here's a helpful page reviewing the deductible limits by age and other requirements for tax deductible LTCI premiums:
The information contained in this post is provided with the understanding that it is not to be interpreted as specific legal or tax advice. Neither LTCI Partners, LLC nor any of its employees or representatives are authorized to give legal or tax advice. Individuals are encouraged to seek the guidance of their own personal legal or tax counsel.