The LTCA product portfolio includes the country's leading Tax-Qualified plans. This means you may be entitled to a federal or state tax deduction or credit for the premiums you pay each year. These tax savings go straight to your bottom line and offset the cost of protection. Best of all, if you go on claim, any benefits received are income tax-free.

How Does a Tax-Qualified Policy Work?

While LTCA is not able to provide specific tax advice-- we recommend your CPA for that-- here's a brief overview of the ways in which LTC insurance premiums receive tax-favored status:

For Individuals

Eligible premiums are included with your other itemized medical expenses. See the chart below for the allowable amount. To the extent your itemized medical expenses exceed 10% of your adjusted gross income you may take the federal tax deduction. For those aged 65 and up, the AGI threshold is 7.5% until January 1st, 2017.

Nearly thirty states offer some type of deduction or credit. These are too varied to cover here, but the Guide to the right provides an overview.

For Businesses

C-Corp's - The actual premium may be deductible when the business purchases qualified LTC insurance on behalf of its owners, employees, spouses or dependents. Such amounts are not considered income to the employees. As always, any benefits are received tax-free.

S-Corp's and LLC's - The actual premium may be deductible when the business purchases qualified LTC insurance on behalf of its employees. Such amounts are not considered income to the employees. As always, any benefits are received tax-free.

The situation is different when the business is paying for the coverage of its owners (or 2% or greater shareholders), spouses and dependents. In this case, the premiums are treated as income. Also, the deduction is capped at the eligible premiums (from the table below).

Additional information for businesses can found here - IRS Publication 535

 

LTC Insurance Deduction Limits

Age at End of Tax Year

2016 Eligible Premium

2017 Eligible Premium

40 or under

$390

$410

41 – 50

$730

$770

51 – 60

$1,460

$1,530

61 – 70

$3,900

$4,090

71 +

$4,870

$5,110