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LONG
TERM CARE - Tax Incentives
HIPPAA (The Health
Insurance Portability & Accountability Act of 1996) sets standards
for long term care insurance, created strict eligibility requirements
for Medicaid and offered incentives for people purchasing long term
care insurance. This is where the tax-qualified and non-tax qualified
policies came into effect.
Medical expenses in excess
of seven and one half percent (7.5%) of
your adjusted gross income are tax deductible. Long term care insurance
premiums for tax-qualified policies contribute to the percentage.
Limits on the Deductibility of
Long-term Care Insurance Premiums, 2007
| Age |
|
Maximum
Deduction |
| 40
years or under |
|
$290 |
| 41-50 |
|
$550 |
| 51-60
|
|
$1110 |
| 61-70 |
|
$2,950 |
| 71+
|
|
$3,680 |
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Please verify rates and rate accuracy with your accountant.
Tax Qualified Policies
- Eligible for tax deductions.
- A doctor must prescribe
that you will need care for a minimum of 90 days.
- In order to receive
benefits, you must need assistance with a minimum of 2 of 6 ADL's
(activities of daily living).
- Benefits are not taxed.
Non-Tax Qualified
Policies
- Benefits are paid
when and how the insurer decides.
- Insurers may require
a minimum of only one ADL can be used to trigger your benefits.
- No tax deductions.
- Benefits are not currently
taxed, but may be in the future. It is unknown what the government
intends to do.
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