The ability to deduct long-term care insurance premiums should not be overlooked by seniors advises the American Association for Long-Term Care Insurance (AALTCI).
“The maximum 2018 a couple both age 70 or older can deduct is $10,400,” explains Jesse Slome, director of AALTCI. The organization issued an Advisory today. “Because the deduction for long-term care insurance isn’t one regularly talked about, we want to make sure seniors especially are aware of the significant tax savings.”
The Internal Revenue Service allows those with tax-qualified long-term care insurance policies to include premiums paid when calculating health care deductions. “Typically when you are still working, you are less likely to be able to deduct your health care expenses,” Slome notes. “But, after retirement or because you have some other medical or dental expenses, the likelihood that long-term care insurance premiums become deductible increases.”
According to the AALTCI Advisory, the amount of long-term care insurance premiums that can be included when calculating health care limits ranges from a low of $420-per-person for tax filers who are age 40 or less to as much as $5,200 for those age 70 and older. The IRS approves nominal increases every year to the amount. To see prior and current limits, visit the Association’s website at www.aaltci.org/tax.
“The benefit applies to tax-qualified long-term care insurance policies,” Slome notes. “For the most part, that is limited to traditional health-based long-term care insurance policies. Hybrid or life insurance policies that can include a long-term care benefit generally do not meet the IRS requirements making premiums tax deductible.”
Some seven million Americans currently have a traditional long-term care insurance policy according to AALTCI estimates. “If you purchased your policy at age 55 or 60, you likely never thought about the tax deductible benefit,” Slome advises. “But, now that you are 65 or 70 or older, it’s important to check if your policy qualifies and to make sure you include the premium payment amount when preparing your taxes or providing information to your accountant or tax preparer.”
The American Association for Long-Term Care Insurance advocates for the importance of long-term care planning and helps consumers connect with knowledgeable professionals who are independent advisors. Consumers looking for local long-term care insurance cost comparisons should visit the Association’s website at www.aaltci.org or can call the organization’s national headquarters at 818-597-3227.
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