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Carla (Full Site) Workman, LTCP
LTC Insurance Advisors
Long Term Care Specialist
Tallahassee, FL
(850) 656-2433 Phone
carlaltc@comcast.net
www.ltcadvisor.info/carla


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Federal Legislation


Individual 1. Premium payments to purchase qualified long-term care insurance by an individual - for yourself, your spouse, and your tax dependents (e.g. your children or dependent parents) are now included as a personal medical expenses if you itemize your taxes [IRC Sec. 213(a)]. 2. Medical expenses in excess of 7 1/2 % of your adjusted gross income are tax deductible. 3. Below is a table of the amount of premiums qualifying as medical expenses for the 2011 and 2012 tax years. This is often referred to as the eligible long-term care premium.

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 the close of the taxable year Amount of premium that counts as an allowable medical expense
 
2011
2012
40 and younger $ 340   $ 350  
41 - 50 $ 640   $ 660  
51 - 60 $ 1,270   $ 1,310  
61 - 70 $ 3,390   3,500  
Older than 70 $ 4,240   $ 4,370  
Source: IRS Revenue Procedure 2009-50 (2010 limits)

Self-Employed Qualified long-term care insurance premiums may also be treated like health insurance for the self-employed tax deduction. Self-employed individuals may deduct 100% of the eligible long-term care premium shown above. The definition of self-employed includes sole proprietorships, partnerships, "greater than 2% shareholders" of S-corporations, or Limited Liability Corporations.

C-Corporations Premium payments are fully (100%) deductible as a reasonable and necessary business expense- similar to traditional health and accident insurance premiums [IRC Sec. 213(d)1]. This can apply to the owners, their spouses and dependents, and all employees. Employer-paid long-term care insurance is excludable from the employee's gross income and the benefits received are tax-free.

Partnerships, S-Corporations and Limited Liability Corporations (LLC) Premium payments purchased for a partner or owner (2%+ shareholder) are subject to the same rules mentioned above for self-employed. Premium payments for non-partner/non-owner or less than 2% shareholder-employee are 100% deductible as a reasonable and necessary business expense -- similar to traditional health and accident insurance premiums. Employer-paid long-term care insurance is excludable from the employee's gross income and the benefits received are tax-free.

 



Find Out More...
HIPPA The Health Insurance Portability & Accountability Act (HIPAA) of 1996 (also known as the Kennedy-Kassebaum Bill), successfully addressed three items that affect long-term care insurance. Find here for more information...

Tax Qualified This section addresses the main differences between the tax qualified (TQ) and the non-tax qualified policies. Find here for more information...

State Taxes State Tax Deductions and Credits State Type Descriptions Click here to learn more...