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Introduction to LTC and LTCI
LTCI Basics
What Does "Tax-Qualified" Mean? |
 Introduction Main Page Long Term Care Basics Long Term Care Insurance Basics
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What Does It Mean to be "Tax-Qualified"? Congress passed the Health Insurance Portability and Accountability Act (HIPAA) in 1996 to ensure that long term care insurance policies that meet certain standards receive favorable tax benefits.For these tax-qualified long term care insurance plans, benefits you receive are generally not considered taxable income and you can also deduct long term care insurance premiums as medical expenses to the extent that you itemize your deductions and your total qualified medical expenses exceed 7.5% of your annual adjusted gross income. (The amount of the deduction is subject to other IRS limits by age.) The following table provides 2006 Figures for Federal Tax Deductibility:
Under a tax-qualified plan, benefits are payable when a licensed health care practitioner certifies that you are unable to perform at least two activities of daily living without substantial assistance for a period expected to last at least 90 days. You are also eligible for benefits if you require substantial supervision to protect yourself due to a severe cognitive impairment such as Alzheimer’s disease. The Federal Program is intended to be federally tax-qualified, and also tax-qualified in many states. For more information on Federal tax deductibility of long term care insurance premiums, see our FAQs. |
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