If you’re thinking about purchasing long term care insurance, it’s important to consider the tax advantages of a “qualified” policy versus a “non-qualified” policy. You also need to be familiar with the various potential long term care insurance tax credits and deductions that you or your business may be eligible for. Read on to learn some of the unique tax benefits that LTC has that can ultimately allow you to get the coverage you need while saving you money at the same time!
In 1996 Congress passed the Health Insurance Portability and Accountability Act (HIPAA). This bill allows for some federal income tax advantages for LTC policies that are designated “tax-qualified” or “qualified.”. LTC policies that don’t meet the requirements under this Act are known as Non-Qualified policies.
If you have a long term care policy, you may be able to deduct all or part of the premiums you pay for the policy. If the premium for your LTC, plus other qualified medical expenses exceeds 7.5 percent of your adjusted gross income, you can deduct a percentage of this premium based on your age. This deduction would be listed under medical expenses if you itemize your tax return.