Related: 10 Long-Term Care Insurance Tax Facts to Know
The Internal Revenue Service recently announced that, for the first time, it will not raise in 2022 the limits for tax deductibility of long-term care insurance premiums.
“Tax deductibility is one of the best-kept secrets and benefits potentially for millions of seniors,” Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI), said in a recent statement. “Deductibility becomes especially valuable after retirement when income decreases and health costs generally go up.”
While the IRS has failed to increase the level in 2022, Slome reported, “the maximum deductibility remains high and the benefit for older individuals and couples is significant.”
According to IRS Revenue Procedure 2021-45, a couple age 70 or older who both have “the right kind of long-term care insurance policy can deduct as much as $11,280 in 2022,” Slome said. “This is the same as the maximum for 2021 and an increase from the $10,860 limit for 2020. The 2019 limit was $10,540.”
Slome added that “the special tax advantages permitted by the IRS are only available for tax-qualified long-term care insurance policies.”
Some 50,000 traditional long-term care insurance policies are being sold annually, according to AALTCI, with the bulk of sales being linked-benefit policies, some of which may offer a limited long-term care insurance tax deduction.
One bill introduced this year allows tax-exempt retirement plan distributions to be used to pay for long-term health care insurance.
See the gallery above for six LTC-related bills introduced in 2021.
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