Long-term care is expensive, but there are certain tax break benefits for it. But what kind of tax breaks can you get for long-term care?
According to LTC Financial Partners, a long-term care insurance agency, you may find that in addition to federal tax credits for long-term care insurance, you can also receive a discount at the state level. The firm says that 30 of the 50 states in the U.S. offer tax incentives for long-term care insurance.
In general, the income from a long-term care insurance policy is non-taxable, and the premiums paid to buy the life insurance are tax deductible, according to the Health Insurance Portability and Accountability Act (HIPAA).
“It makes sense for (states) to subsidize private long-term care insurance, so they won’t go broke providing public assistance,” says Gene Cutler, a New York-based insurance agent with the firm. “The taxpayer should take full advantage of these incentives.”
For 2022, the maximum amount of qualified long-term care premiums includible as medical expenses has increased. Qualified long-term care premiums, up to the amounts shown below, can be included as medical expenses on Form 1040, Schedule A, Itemized Deductions or in calculating the self-employed health insurance deduction:
- Age 40 or under: $450
- Age 41 to 50: $850
- Age 51 to 60: $1,690
- Age 61 to 70: $4,510
- Age 71 and over: $5,640