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.”
The firm also highlighted the age-based federal tax breaks that are available for long-term care policyholders:
- 70 or older: $4,660
- 60 to 70: $3,720
- 50 to 60: $1,400
- 40 to 50: $700
- 40 or younger: $370
(Source: IRS Revenue Procedure: 2013-35)