Nov. 8, 2005- The Internal Revenue Service has announced the
2006 limitations on the deductibility of long-term care
insurance premiums from taxes.
Premiums for "qualified" (see explanation below) long-term care
policies are treated as an unreimbursed medical expense. These
premiums what the policyholder pays the insurance company to
keep the policy in force -- are deductible to the extent that
they, along with other unreimbursed medical expenses (including
"Medigap" insurance premiums), exceed 7.5 percent of the
insured's adjusted gross income.
Long-term care insurance premiums are deductible for the
taxpayer, his or her spouse and other dependents. However, there
is a limit on how large a premium can be deducted, depending on
the age of the taxpayer at the end of the year.
What Is a "Qualified" Policy? To be "qualified," policies
issued on or after January 1, 1997, must adhere to regulations
established by the National Association of Insurance
Commissioners. Among the requirements are that the policy must
offer the consumer the options of "inflation" and
"nonforfeiture" protection, although the consumer can choose not
to purchase these features. Policies purchased before January 1,
1997, will be grandfathered and treated as "qualified" as long
as they have been approved by the insurance commissioner of the
state in which they are sold.
The Taxation of Benefits Benefits from reimbursement
policies, which pay for the actual services a beneficiary
receives, are not included in income. Benefits from per diem or
indemnity policies, which pay a predetermined amount each day,
are not included in income except amounts that exceed the
beneficiary's total qualified long-term care expenses or $250
per day (for 2006), whichever is greater.
The full article:
IRS Issues Long-Term Care Insurance
Premium Deductibility Limits for 2006
About the author:
M. Sanders is a long term care insurance marketing specialist.
She is appointed throughout the United States as a long term
care insurance representative with several major insurance
carriers. Her website,
About
Long Term Care and LTC Insurance, contains information and
articles pertaining to long term care, insurance and other
related senior topics. It is her goal to inform the public about
these
