Deducting long-term care insurance premiums

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Deducting long-term care insurance premiums

Dear Tax Talk:

Is long-term care insurance tax-deductible? And if so, how much of the premium is deductible? Thank you.

Josh

Dear Josh:
Congress, heeding the advice of senior citizens and insurance company lobbyists, created a new deduction a few years ago for premiums paid on long-term care insurance contracts.

This valuable insurance provides you with an allowance for nursing care when you’re too old to do it for yourself. Sold by many life-insurance agents, the costs of these policies are partially deductible as medical expenses subject to the 7.5 percent of your adjusted gross income limitation or, if you’re self-employed, the premiums are deductible as an adjustment to gross income.

How much you can deduct depends on your age, just as the amount of premium depends on your age. The following amounts are deductible provided you paid so much in premium:

Age 40 and under: $240
Age 41 to 50: $450
Age 51 to 60: $900
Age 60 to 70: $2,390
Age 71 and over: $2,990

The amounts that you receive under the policy are generally tax-free when used for long-term care.