IRS Announces Higher Tax Deductions For Long Term Care Insurance
The Internal Revenue Service (IRS) has approved increased deductibility levels for long term care insurance policies purchased in 2010 according to a just-issued report by the American Association for Long Term Care Insurance, the industry trade group.
Some 8.25 million Americans currently own long term care insurance and several hundred thousand new individuals purchase protection each year according to the trade group. In addition to federal tax advantages, a number of states now offer tax deductions or credits to those who purchase long term care insurance protection. A credit is a dollar-for-dollar reduction in the actual cost of insurance.
Tax deductions are limited for individuals financial experts note. However, business owners may be able to fully deduct the cost of long term care insurance for themselves and selected employees. In addition to the tax deductions, a number of insurers now are offering discounts to employers who offer coverage to as few as three employees.
There is still time to take advantage of tax deductions in 2009 and also benefit from the increased deductible limits for long term care insurance next year. To accomplish this, the policy must be purchased prior to the close of the tax year and financial professionals recommend speaking to both your insurance and accounting professional.
The federal deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are as follows:
2010 Long Term care Insurance Deductible Limits
Attained Age Before Close of Taxable Year
40 or less: Deductible Limit: $ 330
More than 40 but not more than 50: $ 620
More than 50 but not more than 60: $1,230
More than 60 but not more than 70: $3,290
More than 70: $4,110
Source: IRS Revenue Procedure 2009-50 (2010 Limits)
Written by Jesse Slome from the American Association for Long Term Care Insurance