Tax-qualified LTCi premiums are considered a medical expense. For an individual who itemizes tax deductions, medical expenses are deductible to the extent that they exceed current amount required to meet the individual’s Adjusted Gross Income (AGI). The amount of the LTCi premium treated as a medical expense is limited to the eligible LTCi premiums, as defined by Internal Revenue Code 213(d), based on the age of the insured individual. That portion of the LTCi premium that exceeds the eligible LTCi premium is not included as a medical expense.
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.
The yearly maximum deductible amount for each individual depends on the insured’s attained age at the close of the taxable year (see table below for current limits). These deductible maximums are indexed and increase each year for inflation. NOTE: the 2024 limits are decreased … for the first time … though the decrease is generally minimal.
2024 Tax Deductibility
The following are the new 2024 deductible limits (2023 in brackets):
|Attained Age Before Close of Taxable Year||2024 Limit (2023)|
|40 or less||$470 ($480)|
|More than 40 but not more than 50||$880 ($890)|
|More than 50 but not more than 60||$1,760 ($1,790)|
|More than 60 but not more than 70||$4,710 ($4,770)|
|More than 70||$5,880 ($5,960)|
The Qualified Long-Term Care Insurance Contract or Life Insurance Contract Per Diem Limitation dollar limit on the benefits is $410 per day.
Source: IRS Revenue Procedure: 2023-34
The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions. To see prior year’s long-term care insurance tax deductible limits, visit the organization’s website (www.aaltci.org/tax).