The IRS just released an announcement that the 2017 tax deduction limits for traditional tax-qualified long term care insurance premiums are increasing for tax year 2017. The increase approximates 5% from the 2016 LTC tax deduction limits.
In 2017, all individuals may deduct unreimbursed qualified medical expenses that exceed 10% of Adjusted Gross Income (AGI) for the year.
Premiums for traditional tax-qualified long term care insurance policies are included within the term unreimbursed medical expenses.
All policies sold today are tax-qualified adhering to the regulations set forth in IRC 7702(B). Should your policy be greater than 20 years old you will need to determine if your policy meets the tax-qualified guidelines.
There are deduction limits based upon the policyholder's attained age before the end of the taxable year.
|Attained Age||2017 Limit||2016 Limit|
|40 and younger||$410||$390|
|age 71 and older||$5110||$4870|
With one exception (State Life Asset Care LTC Rider), the tax deductions are not available for hybrid long term care insurance policies that combine life insurance and or annuity cash value with long term care benefits.
In addition to Federal tax deductions, many states also have tax deductions and tax credits available for the purchase of traditional LTC insurance policies. After retirement, income typically declines and medical costs typically increase. These tax deductions can be beneficial to many seniors.
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