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long-term-care-insurance-tax-deductionsCongress took initial steps to making long-term care insurance more attractive to individuals with the enactment of HIPAA Act of 1996, when tax-qualified long-term care policies were defined.

Here’s a quick review of tax benefits that may be available to your clients and talking points for each client group.

Clients who file itemized tax returns: For your clients who itemize their tax deductions, long-term care insurance premiums are considered a medical expense. Unlike other medical expenses, long-term care insurance premiums are a limited expense, meaning that each year the IRS publishes the maximum amount of long-term care premium eligible as a medical expense. The 2015 limits, increased slightly from 2014, are shown below. Only tax-qualified policies are eligible for this deduction; however, most long-term care policies issued today are considered tax-qualified.

Taxpayer Age

Maximum 2015 Deductible

40 or younger

$380

41 – 50

$710

51-60

$1,430

61-70

$3,800

70 and older

$4,750

Business clients: Businesses offering long-term care insurance to employees may be allowed to deduct premiums paid. The IRS considers long-term care insurance similar to group hospitalization and medical insurance. Do you have clients who are business owners or who are decision makers about employee benefits? More and more workers purchase long-term care insurance at the workplace. This information may be the opener for your next conversation about a multi-life long-term care insurance program.

Clients who are self-employed: These clients may be able to deduct long-term care insurance premiums for qualified policies covering themselves, their spouse, and dependents.

All types of clients:  Benefits from a qualified long-term care insurance policy used to cover qualified expenses are income tax free. Likewise, qualified long-term care services not covered by long-term care insurance are deductible as a medical expense.
This information is intended to highlight opportunities, but of course, not to provide specific tax advice as every client’s situation is different. Before making definitive statements specific to your clients, always involve their tax professionals to confirm how the details may apply in their circumstances.

Contact me today to learn more about long-term care insurance or to get a quote for individual or multi-life products. Let DIS help you make 2015 your best year for long-term care insurance sales.