The IRS announced Tuesday that the deductibility limits for long-term care (LTC) insurance policies purchased in 2011 will be higher than for those purchased in 2010.
According to Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), the industry's trade association, the allowable deductions for purchase of LTC insurance have risen steadily each year, but what is interesting about this year’s announcement is that there is no accompanying increase in Social Security limits or payments. “That really is a clear indication that this is something the government takes seriously and sees it as a benefit to encourage more people to plan,” Slome said in an interview.
The new deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term “medical care” are as follows:
Attained Age Before Close of Taxable Year
40 or less
More than 40 but not more than 50
More than 50 but not more than 60
More than 60 but not more than 70
More than 70
“Tax advantaged long-term care insurance,” Slome explained, “remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners."