Key Tax Benefits of Long-Term Care Insurance 

Tax Deductibility of Premiums: 
Premiums paid for qualified long-term care insurance policies may be tax-deductible as medical expenses. The amount that can be deducted depends on the age of the insured and is subject to specific limits set by the IRS each year. 

For the tax year 2024, the IRS has set the following limits for the deductible amount of LTCi premiums based on the age of the insured at the end of the tax year. 

Qualified Long-Term Care Services: 
Payments made under a qualified long-term care insurance contract for qualified long-term care services are generally tax-free. These services must be necessary for a chronically ill individual and provided pursuant to a plan of care prescribed by a licensed healthcare practitioner.

Self-Employed Individuals: 
Self-employed individuals, including partners in partnerships and more than 2% shareholders in S corporations, can deduct LTCi premiums without itemizing deductions, as long as they meet the eligibility requirements. 

Health Savings Accounts (HSAs): 
LTCi premiums may be paid with distributions from a Health Savings Account (HSA) and may be tax-free up to the age-based limits. 

This table and diagram illustrate the maximum amounts that can be deducted for long-term care insurance premiums in 2024 based on the age of the insured. It’s important to note that these deductions apply if your total medical expenses exceed 7.5% of your adjusted gross income (AGI) and you itemize your deductions.  

Taking advantage of the tax benefits associated with long-term care insurance can help reduce your overall tax burden while ensuring you have coverage for future long-term care needs. Consult with a tax advisor or financial planner to understand how these benefits apply to your specific situation and to make the most of your long-term care insurance policy. 

HERE IS A 2024 TAX SUMMARY GUIDE PROVIDED BY LTCI PARTNERS, LLC 

2024 Tax Guide to LTCI (LTCIP version).pdf (ltcipartners.com) 

Disclaimer: The information provided on this website is for general informational purposes only and is not intended to constitute legal, tax, accounting, or other professional advice or services. Before making any decision or taking any action, you should consult with a qualified tax professional.