If you have a long term care policy, then you may qualify for tax deductions on your premium. First, let’s review what long term care insurance covers and what tax deductions you may qualify for.
What does long term care insurance typically cover?
Long term care insurance is designed to cover long term services and supports. It assists you with the five daily acts of living such as grooming, dressing, toileting, transfer or ambulating, and eating. Long term care is defined as any care that is longer than 3 months. Long term care can take place at a nursing home, assisted care facility or at home.
Are long term care insurance premiums tax deductible?
Long term insurance premiums are tax deductible depending on your age and other factors. According to the IRS, long-term care insurance is treated similar to health insurance. This means that the dollar amounts you receive for personal injury or sickness generally are excludable from income. The premiums you pay are generally tax deductible.
What are the deduction limits by age?
According to the IRS, the 2023 age related deductions are:
- Age 40 or under: $480
- Age 41-50: $890
- Age 51 to 60: $1,790
- Age 61 to 70: 4,770
- Age 71 and older: 5,960
What is the deduction threshold?
For individuals, long term care premiums can be claimed as a medical expense if your combined medical expenses exceed 7.5 percent of your adjusted gross income, and your deductions are itemized on the federal income tax return. It’s important to note that the percentage of your adjusted gross income is subject to change.
Long term care insurance is a great way to cut the costs of your care when you get older. It also can be tax deductible, further decreasing your costs. Call or text one of our experienced Avery Hall agents at 410-742-5111 to learn more about our coverage options.