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LTC Staff
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on Tuesday, 22 July 2014
in LTC Insurance

What is a Tax Qualified LTC Policy?

You may have heard that the federal government is encouraging Americans to purchase Long Term Care policies. One way they have done this is to give certain Long Term Care polices attractive tax advantages

 

In 1996, Congress passed the Health Insurance Portability and Accountability Act or HIPPA. Part of the law stipulated that Long Term Care policies that meet certain standards will receive favorable tax consideration.

Policies that meet these standards are called Tax-Qualified policies. Benefits paid under this type of policy are not considered taxable income. Additionally, tax-qualified Long Term Care Insurance premiums can be deducted as medical expenses. Itemized medical expenses can be deducted if they exceed 10% of Gross Adjusted income for filers under 65 years of age. Filers 65 and older can deduct itemized medical expenses in excess of 7.5% of their Adjusted Gross Income, however this is a temporary exemption which will expire December 31st, 2016. Beginning January 1, 2017, all filers will be able to deduct medical expenses in excess of 10% of Adjusted Gross Income.

Each year, the Internal Revenue Service sets the limit for long term care insurance premiums which can be included in your medical expenses. The limits for 2014 are below:

 

Age Maximum Claimable Amount

Age 40 or Younger

$370

Age 41 to 50

$700

Age 51 to 60

$1,400

Age 61 to 70

$3,720

Age 71 or Over

$4,660

 

*These amounts will change annually based on the Medical Consumer Price Index.

If you would like more information about Long Term Care insurance, or if you would like to receive a quote for Long Term Care coverage, please contact us at 1-800-432-0091 or fill out our online submission form for a free rate comparison.

 

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