Long Term Care Insurance
Tax Benefits.
Health Insurance
Portability and Accountability Act of 1996
This legislation (also known as
the Kennedy-Kassebaum Health Care Bill) signals a major shift in the
government's attitude toward the financing of Long Term Care. It shifts
responsibility from the government to individuals and their insurance companies.
This bill also clarified that any benefits received--up to $270 per day or
$98,550 per year in 2008--will NOT be considered taxable income. LTCI premiums are
deductible as medical expenses for those who itemized when these deductions
exceed 7.5 percent of adjusted gross income. Furthermore:
- LTCI premiums paid by an
employer on behalf of an employee will not be considered income to that
employee.
- If an employer pays LTCI
premiums for their employees, they can deduct the premium as a business
expense, as they do for medical insurance.
LTCI premiums can be deduced as
business expenses by individuals, C-corporations, partnerships, limited
liability corporations, S-corporations, and contributory arrangements (split
premiums) . Note: Not all LTC plans are Tax Qualified. Check with your agent.
Limits On Schedule A
Deductibility for Individuals
|
Attained Age |
2008 Limitations* |
2009 Limitations* |
|
Under 41 |
$310 |
$320 |
|
41 - 50 |
$580 |
$600 |
|
51 - 60 |
$1,150 |
$1,190 |
|
61 - 70 |
$3,080 |
$3,180 |
|
Over 70 |
$3,850 |
$3,980 |
* Limitations will increase
annually, based on the medical care component of the Consumer Price Index.
