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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 not considered taxable income and you can deduct long term care insurance premiums as medical expenses to the extent that your total qualified medical expenses exceed 10% of your annual adjusted gross income.
The amount of long term care insurance premiums that you can include in your total medical expenses is subject to Internal Revenue Service (IRS) limits by age. Here are the current published IRS limits by age:
Your age in years, attained before the close of the taxable year |
Maximum long term care insurance premiums you can include: tax year 2017 |
Maximum long term care insurance premiums you can include: tax year 2018 |
---|---|---|
Age 40 or younger | $410 | $420 |
Age 41 to 50 | $770 | $780 |
Age 51 to 60 | $1,530 | $1,560 |
Age 61 to 70 | $4,090 | $4,160 |
Age 71 or over | $5,110 | $5,200 |
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 Long Term Care Insurance Program (FLTCIP) is designed to be Federally tax-qualified and is also tax-qualified in many states. For more information, see our Tax Benefits FAQs.