skip to Main Content

Long-Term Care Insurance 2013 Updates

The Internal Revenue Service is increasing the Long-Term Care premium deductibility limits and non-taxable benefit amounts for 2013.

Along with other unreimbursed medical expenses, tax-qualified long-term care insurance premiums are deductible to the extent that they exceed the current amount required to meet the insured’s Adjusted Gross Income (AGI). The amount required in 2012 is 7.5%.

Although the amount required will stay at 7.5% for taxpayers 65 years old and older through 2016, the threshold will increase to 10% on January 1, 2013.

Individual taxpayers can treat premiums paid for tax-qualified long-term care insurance for themselves, their spouse or any tax dependents (such as elderly relatives) as a personal medical expense. However, self-employed taxpayers may not deduct the long-term care insurance premium during any calendar month in which the taxpayer or his/her spouse is eligible to participate in a subsidized long-term care insurance plan.

The annual deductibility limit for each taxpayer depends on the insured’s attained age at the close of the taxable year. These limits increase each year with inflation. The following are the deductibility limits for 2013:

Attained age before the close of the taxable year Deductible Limit
40 or less $360
41 – 50 $680
51 – 60 $1,360
61 – 70 $3,640
Older than 70 $4,550

The benefits received from a tax-qualified long-term care insurance policy that was purchased by an individual are generally non-taxable. Benefits paid under an indemnity policy (or per diem) are non-taxable unless they exceed the higher of the beneficiary’s total cost of qualified long-term care or $320-per-day.

 

Enhanced by Zemanta

This Post Has 0 Comments

Leave a Reply

Your email address will not be published.

Back To Top
Search