What Should I Know About LTCI and Taxes?
Tax-free benefits are just one of the features of tax-qualified long term care policies.
What Should I Know About LTCI and Taxes? |
NOTE: The following information about the tax issues pertaining to Tax Qualified Long Term Care Insurance (TQ LTCI) is meant to provide general guidelines only and is not all-inclusive. A more in-depth discussion of the tax guidelines surrounding TQ LTCI can be referenced in the Genworth Tax Guide. We do not give legal or tax advice and nothing herein should be construed as such. We highly recommend you seek the assistance of your own legal or accounting professional for advice pertaining to your particular situation.
Tax-Qualified vs. Non Tax-Qualified Policies (TQ vs. NTQ)
Almost all LTCI policies sold today are Tax-Qualified. The Health Insurance Portability and Accountability Act of 1999 (HIPAA) clarified that under Tax-Qualified policies, benefits are received tax free for actual LTCI expenses incurred. For policies that pay on an indemnity or cash basis, benefits received are tax free up to a daily/monthly amount declared by the government annually. In 2015 this amount is $330 per day ($9,900 for a 30 day month), which is well above the average costs of services. Individual Taxpayers
Individuals who purchase Tax Qualified (TQ) Long Term Care Insurance (LTCI) policies for themselves, their spouse or their tax dependents, can include the premiums paid as an un-reimbursed medical expense if they itemize deductions. Un-reimbursed medical expenses are only deductible to the extent they exceed 7.5% of the taxpayer’s Adjusted Gross Income. The amount of TQ LTCI premium that can be included in the un-reimbursed medical expenses is subject to limits established by the government each year: Age 2015 Eligible Premium Limit 40 and younger $380 41-50 $710 51-60 $1,430 61-70 $3,800 71 and older $4,750 |
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P.O. Box 310878 New Braunfels, TX 78131 (830) 626-8509 Click Here to Email Us |
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