Long Term Care Insurance Deductible Limits For 2012 Increased 3 Percent
Individuals and business owners who purchase long term care insurance (LTCI) next year will benefit from higher tax deductible limits.
According to the American Association for Long Term Care Insurance, the Los Angeles-based national trade group, the Internal Revenue Service has agreed to raise the tax deductible limits by roughly three percent over the current limits.
"The federal government clearly wants to encourage more Americans to plan for the risk of needing costly long-term care," explains Jesse Slome, the Association executive director. "The maximum deductible limit for a couple will be $8,740 in 2012, compared to the 2011 limit of $8,480." Limits are based on the attained age of the insured before the end of the tax year.
In addition to the federal tax deduction available to individuals, a growing number of states now offer deductions. "Some even offer tax credits which are more valuable that deductions," Slome adds. The IRS announced increased tax deductible limitations for all age bands.
“Business owners and self-employed individuals can take advantage of significant tax-savings opportunities that could literally make the entire cost of this protection fully tax deductible," Slome notes. "A business may be able to deduct the full cost of long term health care premiums for selected employees and even cover spouses and family members." A growing number of insurance companies offer discounts when employers offer coverage to all employees. Some will make these available to firms with a few as three eligible individuals.
The 2012 deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are as follows:
Attained Age Before Close of Taxable Year
40 or less - $350
More than 40 but not more than 50 - $660
More than 50 but not more than 60 - $1,310
More than 60 but not more than 70 - $3,500
More than 70 - $4,370
According to the Association, some 8.1 million Americans currently own long term care insurance and experts project that some 500,000 new policies will be purchased this year. "The sweet spot for looking into this coverage is between the ages of 52 and 64," Slome says. "You'll pay less when you qualify for good health discounts and take advantage of various discounts now available."
A complete explanation of tax deductible rules for individuals and business owners can be found on the Association's website http://www.aaltci.org/tax.
Written by Mindy Hartman: American Association for Long Term Care Insurance
Edited by Armen Hareyan