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November 19, 2018 at 02:15 PM
Traditional tax-qualified long-term care insurance policies now have new tax deductibility limits, according to the IRS.
Premiums for tax-qualified long-term care insurance policies are considered a medical expense, according to the American Association for Long-Term Care Insurance, and for an individual who itemizes tax deductions, medical expenses are deductible to the extent that they exceed the current amount required to meet the individual’s adjusted gross income (AGI).
Neither hybrid nor linked benefit (life plus LTC or annuity plus LTC) policies qualify for the deductions. However, individual taxpayers can treat premiums paid for tax-qualified long-term care insurance for themselves, their spouse or any tax dependents (such as parents) as a personal medical expense, according to AALTCI’s website.
The new 2019 limits for traditional LTC insurance premiums (that can be included as “medical care”) are as follows: If the policyholder’s attained age before the close of the taxable year is 40 or younger, $420 in premiums are deductible, unchanged from 2018. For policyholders 41 to 50, the limit is $790, versus $780 in 2018.
