May a self-employed individual deduct premiums paid for a qualified long term care insurance contract?
Because amounts paid for qualified long term care insurance contracts come within the definition of medical care, qualified long term care insurance premiums are eligible for deduction from income by self-employed individuals. The amount of eligible qualified long term care insurance premiums that may be deducted is subject to dollar amount limits.
The deduction is not available to a self-employed individual for any calendar month in which he or she is eligible to participate in any subsidized health plan maintained by his or her employer or by an employer of his or her spouse. This rule is applied separately to plans that include coverage for qualified long term care services or that are qualified long term care insurance contracts and to plans that do not include this coverage and are not long term care insurance contracts.
Beginning in 2003, 100 percent of amounts paid during a taxable year for insurance, including long term care insurance up to the annual limits, that provides medical care for an individual, his or her spouse, and his or her dependents can be deducted by a self-employed individual. Sole proprietors, partners, and S corporation shareholders owning more than 2 percent of an S corporation’s shares generally may take advantage of this deduction.
 .IRC Secs. 162(l), 213(d).
Are long term care insurance premiums paid by an employer includable in employees’ income?
An employer’s plan that provides coverage under a qualified long term care insurance contract generally is treated as an accident and health plan with respect to that coverage. Thus, premiums for long term care insurance coverage paid by an employer are not includable in the gross income of employees.
May an employer deduct as a business expense premiums paid for a qualified long term care insurance contract for employees?
An employer plan providing coverage under a qualified long term care insurance contract is treated as an accident and health insurance plan with respect to this coverage. An employer generally may deduct health insurance premiums paid for employees as a business expense. Thus, premiums for a qualified long term care insurance contract paid by an employer for employees are similarly deductible.