The following are the new 2023 deductible limits per individual (2022 limits in brackets):
|Attained Age Before Close of Taxable Year||2023 Eligible Premium vs. (2022)|
|40 or less||$480 ($450)|
|More than 40 but not more than 50||$890 ($850)|
|More than 50 but not more than 60||$1,790 ($1,6,90)|
|More than 60 but not more than 70||$4,770 ($4,510)|
|More than 70||$5,960 ($5,640)|
Example: Julie who is age 61, owns her own business. Her long-term care insurance premium is $3,000 annually ($250 per month in premium). Based on the deduction chart, she is eligible to deduct up to $4,770. Which means that she can deduct her entire $3,000 annual premium amount. If Julie were only 42, she could only deduct $480 for the 2023 tax year.
This deduction is generally for traditional Long-Term Care Insurance policies. Most alternative policies, such as Extended Care (AKA Short-Term Care) plans do not qualify for a tax deduction unless the contract is specifically “tax-qualified”. If you purchase a “Hybrid” plan where a portion of the Hybrid LTC plan’s premium is paid separately, then you may be able to deduct the LTC portion of the Hybrid plan. Life Insurance is not tax deductible.
We recommend consulting with your CPA regarding your personal tax situation and deductions for LTC premiums.
We offer various insurance products to help you with your insurance needs.