IRS sets 2016 LTCI tax deduction limits

In 2016, the LTCI premium deduction limit increased to:

• $390, from $380, for consumers ages 40 or younger;
• $730, from $710, for consumers ages 41 to 50;
• $1,460, from $1,430, for consumers ages 51 to 60;
• $3,900, from $3,800, for consumers ages 61 to 70; and
• $4,870, from $4,750, for consumers ages 70 and older.

In percentage terms, the increase for consumers ages 41 to 50 is richest: about 2.8 percent of the 2014 LTCI premium deduction limit.

The increase for consumers ages 51 to 60 amounts to just 2.09 percent of the 2014 limit.

For consumers in the other age groups, the deduction increase amounts to about 2.5 percent to 2.6 percent of the 2014 limit.

The new IRS notice also gives the 2016 numbers for a number of other insurance-related limits, such as the maximum daily benefit limit, under Internal Revenue Code (IRC) Section 7702B(d)(4), for an LTCI contract or life insurance chronic care contract that qualifies for special tax treatment. The daily benefit limitation has increased to $340, from $330.