IRS Issues Long-Term Care Premium Deductibility Limits for 2018

Long Term Care Insurance (LTCI) remains one of the most tax advantaged planning solutions available. Not only are the benefits paid tax-free (IRC 7702b), but policyholders may deduct some or all of their premiums. The Internal Revenue Service has announced it will be increasing the amount long term care insurance policyholders can deduct from their 2018 taxes for owning coverage. Oct. Feature Article

Premiums for qualified long term care insurance policies are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured’s adjusted gross income in 2018. (IRC Sec. 213)

However, there are age-banded limits on how much premium can be deducted, and these are based on the policyholder’s age at the end of the year.

Below are the deductibility limits for 2017 and 2018. Amounts above these limits are not considered to be a medical expense.

Attained age before the close of the taxable year Maximum deduction for 2017 Maximum deduction for 2018
40 or less $410 $420
More than 40 but not more than 50 $770 $780
More than 50 but not more than 60 $1,530 $1,560
More than 60 but not more than 70 $4,090 $4,160
More than 70 $5,110 $5,200
Source: IRS Revenue Procedure 2016 – 55 (2017 limits) and 2017-58(2018 limits).

The IRS also updated their benefit amounts allowed for per diem or indemnity policies, which pay a predetermined amount each day. These benefits are not included in income except amounts that exceed the beneficiary’s total qualified long term care expenses or $360 per day. whichever is greater. (This amount did not change from 2017).

Whether you already own, or are looking to buy long term care insurance, you can learn more about these tax incentives by downloading our free consumer guide.

The information provided in these materials, developed by an independent third party, is for informational  purposes only and has been obtained form sources considered to be reliable, however, Newman Long Term Care, the marketing name for Newman Financial Services, LLC, does not guaranteed that the foregoing material is accurate or complete. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.
The information does not take into consideration your personal financial or account information. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results.
Newman Long Term Care and its respective associates and employees cannot provide legal, accounting, or tax advice or services. Thus, these educational tools are not intended to serve as the basis for any investment or tax-planning decisions. Please consult your attorney or tax professional.
Newman Long Term Care is a Thrivent Financial company.

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