2024 Tax Deductible Limits Long-Term Care Insurance

The IRS has announced decreased 2024 tax deductible limits for long-term care insurance according to the American Association for Long-Term Care Insurance.

“This is a significant change in practice after yearly increases,” states Jesse Slome, director of the American Association for Long-Term Care Insurance. “The 2024 deductible limits are still significant and few people, especially business owners, are aware that premiums paid for long-term care insurance may be tax deductible.”

The just announced 2024 limits for an individual age 70 or more is $5,880, according to AALTCI. The 2023 maximum deductible limit for that age band is $5,960.

“This is still a significant tax deduction,” Slome explains. “Most policies are purchased by couples which means they could deduct up to $11,760 next year depending on their age.”

Only long-term care policies that meet the federal government’s tax-qualified requirements qualify for a potential tax deduction, the long-term care insurance expert notes. “Most of the linked benefit or hybrid life insurance policies, the ones more popular today do not qualify for a possible tax benefit,” Slome notes.

“Two types of individuals can gain the most benefit from the IRS deductions,” Slome adds. “First business owners, who may be able to deduct the full cost of their insurance protection and have a paid-in-full policy when they reach retirement age.”

In addition, people who have retired from jobs can benefit. “That’s when income levels enable more people to reach the required health expense threshold to make premiums deductible,” Slome acknowledges. “That potential tax deduction can be a huge benefit after retirement and something seniors should take into consideration when looking into their long-term care protection options.”

2024 Maximum Deduction Limits Long-Term Care Insurance

The following are the new 2024 deductible limits per-individual (2023 limits in brackets):

Attained Age Before Close of Taxable Year     2024 Limit (2023)
40 or less                                                                   $470  ($480)
More than 40 but not more than 50                   $880  ($890)
More than 50 but not more than 60                   $1,760  ($1,7,90)
More than 60 but not more than 70                   $4,710  ($4,770)
More than 70                                                            $5,880  ($5,960)

The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions.  To see prior year’s long-term care insurance tax deductible limits, visit the organization’s website (https://www.aaltci.org/tax) or call the organization at 818-597-3227 to connect with a long-term care insurance professional who can provide no-obligation and cost comparisons.

Find local Medicare Advantage agents listed on the American Association for Medicare Supplement Insurance’ directory.

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“The tax advantages and long-term care planning options for businesses can be significant,” says Jesse Slome, director of the American Association for Long-Term Care Insurance.  “Tax deductibility is now possible with some of the hybrid long-term care policies people are increasingly purchasing.”

A hybrid long-term care policy combines the benefits of life insurance or an annuity with long-term care benefits.  “If it turns out that long-term care (LTC) is not needed, the life portion pays a death benefit to the designated beneficiary when the insured passes away,” Slome explains.

All traditional long-term care insurance policies and a limited number of hybrid policies attached to life insurance with separately identifiable LTC premium components will offer tax deductibility.  “Businesses formed as C-Corporations enjoy the most significant tax benefits,” Slome notes. Some 90 percent of C-Corps have fewer than 100 employees according to Census data.  “Every small and mid-sized business owner looking for tax and planning advantages would benefit by learning more,” he adds.

According to the Association, an increasing number of insurance companies are offering hybrid long-term care options.  The plans can vary however in terms of meeting the criteria for tax deductibility, policy costs as well benefit provisions.  ”It makes comparing the available options most worthwhile,” Slome advises.

Among hybrid long-term care policies, potentially significant differences include how the insurer will eventually pay claims.  “The differences can vary most in terms of how home care benefits are paid,” Slome points out.  “Some policies utilize a reimbursement formula with specific contractual limitations regarding who can provide care.  Alternatively, a cash benefit method provides payments without such limitations including the ability to pay family members who are providing care.”

“Cash payments provide the greatest flexibility and possibilities when care is needed,” explains Tony Massenelli, Director, Long-Term Care Sales for Nationwide, a leading provider of hybrid long-term care solutions. “One of our plans provides a retroactive lump-sum cash payment for home care back to day-one after the 90-day elimination or deductible period is met.”

Other differences include options that can increase the future value of available benefits. “An inflation growth option can address the risk of rising care costs,” adds Slome who notes that most insurers offer a fixed rate formula.  “Nationwide’s CareMatters II policy also offers an inflation option tied to the increase to U.S. medical care costs, an option that a number of long-term care insurance specialists find is more relevant for their clientele.”

To learn more about both traditional or hybrid long-term care insurance visit the American Association for Long-Term Care Insurance website.  To receive no-obligation comparisons and long-term care insurance quotes from an independent specialist, call the organization at 818-597-3227.

About the American Association for Long-Term Care Insurance.   Founded in 1998, AALTCI advocates for the importance of protecting against the real risk of needing long-term care and supports insurance professionals who market traditional and linked-benefit LTC insurance solutions.   Visit https://www.aaltci.org for more information.

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“Tax deductibility for those purchasing certain government-approved long-term care insurance is an incredible benefit,” explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).  “The tax deductibility becomes especially valuable in retirement when income decreases and health costs generally go up.”

The Internal Revenue Service just announced the increased 2021 limits for tax deductibility of long-term care insurance premiums.  According to IRS Revenue Procedure 2020-45, a couple age 70 or older who both have the right kind of long-term care insurance policy can deduct as much as $11,280 in 2021 an increase of $420 from the $10,860 limit for 2020.  The 2019 limit was $10,540.

“The special tax advantages permitted by the IRS are only available for tax-qualified long-term care insurance policies,” Slome explains.  “Today, many financial advisors promote linked-benefit or hybrid life insurance policies with a long-term care benefit but these almost never will qualify for the IRS-approved tax deductibility.”

Slome notes that the tax deductibility benefit often does not come into play when the individual or the couple is first purchasing insurance protection.  “Before retirement most people can’t reach the threshold whereby long-term care insurance premiums are going to be tax deductible,” Slome acknowledges.  “But after retirement it’s far more likely that you can benefit from the deductibility.”

2021 Tax Deductibility

The following are the new 2021 deductible limits per-individual (2020 in brackets):

Attained Age Before Close of Taxable Year     2021 Limit (2020)
40 or less                                                           $450  ($430)
More than 40 but not more than 50                    $850  ($810)
More than 50 but not more than 60                    $1,690  ($1,6,30)
More than 60 but not more than 70                    $4,520  ($4,350)
More than 70                                                      $5,640  ($5,430)

The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions.  To see prior year’s long-term care insurance tax deductible limits, visit the organization’s website (www.aaltci.org/tax) or call the organization at 818-597-3227 to connect with a long-term care insurance professional who can provide no-obligation and cost comparisons.

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“Tax deductibility for your long-term care insurance is a great subsidy especially after retirement, but only a small segment of newly purchased long-term care insurance policies offer the tax deductible opportunity,” explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).

The Internal Revenue Service just announced the increased limits for tax deductibility of long-term care insurance premiums.  According to IRS Revenue Procedure 2019-44, a couple age 70 or older who both have the right kind of long-term care insurance policy can deduct as much as $10,860 in 2020.  The 2019 limit is $10,540.
“The special tax advantages allowed by the IRS are only available with tax-qualified health-based long-term care insurance,” Slome explains.  “Many more individuals today are buying linked-benefit LTC policies such as life insurance and annuity policies with a long-term care benefit but these almost never will qualify for premium tax deductibility.”
The tax deductibility often does not come into play when the individual or the couple is first purchasing insurance protection.  “Before retirement most people can’t reach the threshold whereby long-term care insurance premiums are going to be tax deductible,” Slome acknowledges.  “But after you stop working the likelihood you can benefit from this tax advantage increases significantly, something to keep in mind when considering what option is best for you.”
The following are the new 2020 deductible limits (2019 in brackets):

2020 Tax Deductible Limits Long-Term Care Insurance

Premiums paid for traditional long-term care insurance are includable in the term ‘medical care’.   The following are the just announced 2020 limits (per-individual):

Attained Age Before Close of Taxable Year         2020 Limit (2019)
40 or less                                                                    $430  ($420)
More than 40 but not more than 50                     $810  ($790)
More than 50 but not more than 60                     $1,630  ($1,580)
More than 60 but not more than 70                     $4,350  ($4,220)
More than 70                                                             $5,430  ($5,270)

The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions.  To see prior year’s tax deductible limits, visit the organization’s website (www.aaltci.org/tax) or call the organization at 818-597-3227 to connect with a long-term care insurance professional who can provide no-obligation and cost comparisons.

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Jesse Slome,
director AALTCI

Increased tax deductible limits in 2019 that can provide significant tax savings for owners of traditional long-term care insurance policies were revealed today by the American Association for Long-Term Care Insurance.

“A senior couple who are both older than 70 could be able to deduct over $10,000 from their Federal income taxes, a significant benefit that older retired Americans can really benefit from,” declared Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).

Slome noted that the special tax advantages approved by the IRS are only available with tax-qualified health-based long-term care insurance.  “Roughly six million individuals have a traditional long-term care insurance policy though they have been losing favor to linked benefit life insurance and annuity policies that do not offer the tax deductibility benefit,” Slome shared.

“Few older individuals are aware of the tax deductibility benefit,” Slome notes.  “When you are younger and working, the benefit is nominal if any but once you retire and may have other health expenses, the tax savings benefits could be huge.”  According to the Association analysis, many older Americans who have health expenses can add their long-term care insurance premium costs to qualify for the IRS approved deduction.

2019 Tax Deductible Limits Long-Term Care Insurance

According to AALTCI, premiums paid for traditional long-term care insurance are includable in the term ‘medical care’.   The following are the just announced 2019 limits:

Attained Age Before Close of Taxable Year         2019 Limit
40 or less                                                                    $420
More than 40 but not more than 50                            $790
More than 50 but not more than 60                          $1,580
More than 60 but not more than 70                          $4,220
More than 70                                                            $5,270

The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions.  To see prior year’s tax deductible limits, visit the organization’s website (www.aaltci.org/tax) or call the organization at 818-597-3227 to connect with a long-term care insurance professional who can provide no-obligation and cost comparisons.

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Jesse Slome, leading long term care insurance expert, director AALTCI

The American Association for Long-Term Care Insurance announced support for the AARP-coalition seeking continuation of the medical expense tax deduction.  Premiums for approved tax-qualified long-term care insurance may be a deductible expense for individuals, a significant benefit for seniors during retirement.

“There are millions of seniors who have limited retirement income who also face medical costs,” declares Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).  “They need this deduction and taking it away while giving tax deductions to millionaires would be an affront to American seniors.”

The AARP-led coalition reportedly delivered a letter this week to leading U.S. Senators asking them to continue their fight to maintain the medical expense deduction.  The coalition includes the American Health care Association, the Alzheimer’s Association, the American Heart Association, the American Psychological Association, the March of Dimes and the National Committee to Preserve Social Security and Medicare.

“We are tiny by comparison but this is a most worthy effort we are proud to support,” said Slome.  The organization advocates for the importance of long-term care planning and supports insurance professionals who offer various planning options.  “There are millions of seniors who purchased tax-qualified long-term care insurance policies who would lose the option to deduct premiums at a point when living off limited retirement income and Social Security.”

According to the Association, roughly eight million Americans have some form of long-term care insurance.  Most policies sold over the past decade met the IRS established tax-qualified standards, Slome notes.  “Currently, only a small percentage of long-term care insurance policies now sold meet the requirements to be tax deductible but it still a vital benefit that should not be taken away from America’s retired seniors.”

For a couple who are both older than 70 and paying for long-term care insurance, the maximum allowable amount eligible for the deduction calculation would be $10,400.  For an individual, age 65, the maximum allowable amount would be $4,160 according to AALTCI.   “The IRS allows you to deduct qualified medical expenses that exceed 7.5% of your adjusted gross income for 2018,” Slome explains.   “Beginning January 1, 2019, all taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that exceeds 10% of their adjusted gross income.”

The American Association for Long-Term Care Insurance advocates for the importance of planning and helps consumers connect with knowledgeable professionals who are independent advisors.

Consumers looking for local long-term care insurance agents or cost comparisons should visit the Association’s website at www.aaltci.org or can call the organization’s national headquarters at 818-597-3227.

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Long-Term Care Awareness Month logo 2017

October 23, 2017 -  Los Angeles, CA — Tax deductible limits for traditional long-term care insurance premiums paid in 2018 have been increased according to the American Association for Long-Term Care Insurance.

“The tax deductibility of some tax-qualified long-term care insurance provides significant value to consumers especially after they retire” explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).   “The special tax advantages are only available with tax-qualified health-based long-term care insurance though it would be valuable one day to see them added to linked-benefit products such as life insurance or annuity policies that can provide a future long-term care benefit.”

According to Slome, the vast majority of new long-term care insurance policies purchased today are combo products.  “Only traditional long-term care insurance policies have the benefit of potentially being tax-deductible to an individual,” Slome acknowledges.  “After retirement when a person’s income often declines, the tax deductions for your premium costs can take on a significant added value.”

Premiums paid for traditional long-term care insurance are includable in the term ‘medical care’.   The following are the just announced 2018 limits:

Attained Age Before Close of Taxable Year         2018 Limit
40 or less                                                                   $420
More than 40 but not more than 50                           $780
More than 50 but not more than 60                          $1,560
More than 60 but not more than 70                          $4,160
More than 70                                                            $5,200

“Our nation needs to have more Americans saving for retirement and also having a plan to pay for the very real risk of needing long-term care,” Slome adds.  “A 70-year old couple has the potential to deduct over $10,000 each year and that should give one real pause to reflect on the value of planning while you can still health-qualify for this protection.”

The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions.  To see prior year’s tax deductible limits, visit the organization’s website (www.aaltci.org/tax) or call the organization at 818-597-3227 to connect with a long-term care insurance professional who can provide no-obligation and cost comparisons.

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“A senior can deduct up to $5,110, or as much as twice that for a couple, of their long-term care insurance cost which is a significant savings,” explained Jesse Slome, director of the American Association for Long-Term Care Insurance.   Slome was sharing a report with top long term care insurance agents based on the latest data available from the Internal Revenue Service.

According to Slome, some 8.66 million Americans took itemized deductions when filing their 2015 federal returns.   ”While the limits one has to meet to deduct health care related expenses have increased, the number of 2015 tax filers who took medical deductions actually increased by 1.6 percent over the prior year,” Slome noted.

The national long-term care insurance expert shared the relevance of this data to agents who market and sell tax-qualified long-term care insurance.  “While individuals buying long-term care insurance may not be able to deduct their costs in early years, they are far more likely going to do so after retirement,” Slome explained.  “After retirement, income drops and often there are significant medical and dental expenses that mean you’ll be far more likely to meet the tax deduction limits.”

Individuals who have certain forms of tax-qualified long-term care insurance can include the cost of premiums paid when calculating eligible medical and dental expenses.   The limits are based on age at the close of the taxable year.  “An individual who is more than 70 years old can deduct up to $5,110 of their tax qualified long-term care insurance premiums,” Slome shared.   The minimum amount eligible to be included is $410 a year for an individual age 40 or less.

“Individuals must meet health criteria to purchase long-term care insurance and so those with significant medical expenses likely won’t qualify for the coverage,” Slome admits.  “You must look into this and apply while still in good health.  The tax deductibility won’t be immediate but it’ll be really valuable in the future when you have lowered income and higher medical expenses.”

In addition, not all insurance policies that may provide a long-term care benefit are considered tax qualified and eligible for the tax deductibility.   Life insurance policies that provide a long term care benefit, sometimes referred to as a linked benefit policy, generally do not meet the tax deductible eligibility requirements.

To learn more about tax qualified long-term care insurance and connect with an insurance professional visit the Association’s website at www.aaltci.org or call 818-597-3227.   The American Association for Long-Term Care Insurance is a member-supported organization created in 1998.  Slome also serves as director of the American Association for Medicare Supplement Insurance and the National Advisory Center for Short Term Care Information.

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Jesse Slome, long term care insurance expert

October 25, 2016 -  Los Angeles, CA — The tax deductible limits for traditional long-term care insurance premiums paid in 2017 increased according to a just-released IRS announcement.

“The tax deductibility of premiums when you purchase traditional long-term care insurance provides a real incentive for consumers, especially after retirement,” explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).   “The special tax advantages are not available when individuals purchase linked-benefit products such as life insurance or annuity policies that can provide a future long-term care benefit.”

According to AALTCI, in 2016 more people will purchase combo products than are purchasing traditional LTC insurance policies.  “Only traditional long-term care insurance policies have the benefit of potentially being tax-deductible to an individual,” Slome acknowledges.  “After retirement when income typically declines, tax deductions can take on a significant added value to take advantage of.”

Starting in 2017, all individuals may deduct qualified medical expenses that exceed 10 percent of adjusted gross income (AGI) for the year.   For 2016, individuals age 65 and older the threshold remains at 7.5 percent of AGI.

Premiums paid for traditional long-term care insurance are includable in the term ‘medical care’.   The following are the just announced 2017 limits:

Attained Age Before Close of Taxable Year         2017 Limit                    2016 Limit

40 or less                                                               $410   (+ 5.1%)               $390
More than 40 but not more than 50                       $770                                 $730
More than 50 but not more than 60                      $1,530                           $1,460
More than 60 but not more than 70                      $4,090                           $3,900
More than 70                                                        $5,110 (+4.9)                $4,870

Source:  IRS Revenue Procedure 2016-55 (2017 limits) and 2015-53 (2016 limits)

5 Million Who Itemize Medical Costs Could Deduct Long-Term Care Insurance Premiums

The IRS allows individuals to deduct medical expenses including preventative care, dental and vision care, prescription medications, glasses, contacts and hearing aids.  “Many seniors have medical expenses that don’t meet the threshold but when the cost of long-term care insurance is included, the threshold is exceeded providing a significant tax deduction,” Slome notes.

“This is a real benefit for the 23 million individuals age 65 or older who file federal tax returns,” shares Slome.  AALTCI analyzed IRS reports for the latest tax year (2014).  “Nearly 5.1 million tax filers who reported income of between $40,000 and $100,000 reported medical expenses in excess of the AGI limits.  For retired seniors the combination of reduced income and increased medical costs means the cost of traditional long-term care insurance can be all or mostly tax deductible.”

The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions.  Visit the organization’s website (www.aaltci.org) or call the organization at 818-597-3227 to connect with a long-term care insurance professional who can provide no-obligation and cost comparisons.

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2016 guide to tax deductible long term care insurance

Few consumers realize that long term care insurance premiums may be tax deductible and that special tax advantages are available for business owners advises the head of the American Association for Long-Term Care Insurance.

“Tax deductible long term care insurance is a significant benefit available to millions,” shares Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI).  “Few people are aware of the rules or the amounts that may be deductible.”

The Association announced availability of the 2016 Guide To Tax Qualified Long Term Care Insurance Protection.  Electronic versions of the guides can be obtained by Association members.   The guides will be personalized with the member’s contact information and photograph.  A $35 one-time charge covers the cost of preparing the personalized artwork supplied in a PDF format.

“In 2016, a 65-year old may be able to deduct up to $3,900 of the cost for long-term care insurance,” Slome explains.  “Individuals have to meet certain thresholds for allowable medically-related deductions but after retirement, this becomes much easier to do and the tax savings can be quite significant to a retired individual or couple.”

Business owners have greater latitude in their ability to deduct long term care insurance costs.  “Tax deductible long-term care insurance is one of the last great tax deductible benefits for owners and their key employees,” Slome adds.  “Small businesses with owners in their 50s and 60s that are looking for tax deductions should definitely consider long term care insurance protection.”

To obtain a personalized PDF of the 2016 guide to tax deductible long term care insurance  visit the organization’s website and sign in to the Member’s section or call the organization at 818-597-3227 and request the order form.

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