IRS Announces 2016 Deductible Limits for Long Term Care Insurance
The IRS has released the 2016 deductible limits for affordable Long Term Care Insurance. Tax Qualified LTC plans are deductible in some situations, plus the self-employed, S Corps and LLC’s can also deduct premiums. “C” corps can deduct without any limits.
“This is outstanding news for millions of Americans who own or are considering long-term care insurance,” explains Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI). The AALTCI is a national consumer advocacy group dedicated to educating the American people and insurance and financial professionals on Long Term Health Care planning and Long Term Care Insurance.
Slome says the increase amounts to about 2.5 percent compared to the prior year.
“Tax advantaged Long Term Care Insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners,” Slome explains.
“While deductions may not apply for individuals who are still working, they often can be taken during retirement when income stops and medical expenses often occur,” he said.
A Long Term Care Insurance Specialist and your tax advisor can provide with details on the tax advantages and if they may apply to you. Some states also have tax advantages available. In addition, those with Health Savings Accounts (HSA’s) can use pre-tax dollars from the account to pay for LTCi premiums.
The 2015 and 2016 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 Close of Taxable Year 2015/2016
40 or less $380/$390
More than 40 but not more than 50 $710/$730
More than 50 but not more than 60 $1,430/$1,460
More than 60 but not more than 70 $3,800/$3,900
More than 70 $4,750/$4870
Source: IRS Revenue Procedure 2014-61 (2015 limits) and 2015-53 (2016 limits)