Tax Deductions: Long-Term Care Insurance

Long-Term Care Insurance
Tax Advantages for Individuals

Purchasing a tax-qualified long-term care insurance policy may offer tax advantages.

Long-term care insurance premiums may be tax deductible

Under current tax laws, you may be able to deduct a portion of the premium you pay for a tax-qualified long-term care insurance policy. Each year, the federal government sets limits for eligible premium — the amount that may be deducted.

The eligible premium amount may be claimed as a medical expense as long as your combined medical expenses exceed 10 percent of your adjusted gross income and you itemize deductions on your federal income-tax return.

Eligible Premium Guidelines
for 2019
At age: You can deduct:
40 and younger $420 Source: IRS Revenue Procedure 2018-57
Eligible premiums are established annually based on the medical care components of the Consumer Price Index.
41 – 50 $790
51 – 60 $1,580
61 – 70 $4,220
71 and older $5,270

Long-term care insurance policy benefits are intended to be tax-free

The benefits you receive from a tax-qualified long-term care insurance policy are intended to be tax free as long as they do not exceed the greater of your qualified long-term care daily expenses or the per-day limitation, which is $370 in 2019.
Source: Section 7702B of the Internal Revenue Code (IRC)

Out-of-Pocket long-term care expenses also may be tax deductible

If you pay long-term care expenses out of your own pocket (i.e., home care services, nursing home care, etc.), you generally may claim these expenses as a medical deduction on your income tax return. The only exception is payment for hom care provided by a family member. These expenses are not deductible unless the family member is a licensed health-care professional.

The information provided is not intended to be tax advice. Consult your tax advisor to determine the tax benefits for your situation.