2021 COLA adjustments for Long Term Care insurance premiums

The Internal Revenue Service issued Rev. Proc. 2020-45 providing the 2021 cost of living adjustments (COLAs) for certain items under the Internal Revenue Code (IRC), including “for eligible long term care premiums.” The maximum deduction that an individual who itemizes deductions may take for qualified long term care insurance premiums is set under IRC §213(d) and adjusted annual for increases in the medical care cost component of the consumer price index.

The new maximum qualified long term care premium deductions under IRC §213 – for taxable years beginning in 2021 are as follows:

Additionally, Rev. Proc. 2020-45 provides that the stated dollar amount of the per diem limitation under IRC § 7702B(d)(4) is $400 for 2021 (2020 was $380).

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