Long Term Care Insurance & Taxes
QUESTION 1. Are long term care insurance premiums federally tax-deductible? ANSWER: If you (or your spouse) are a business owner, you can most likely deduct at least a portion of your premiums. If not, then most likely you cannot deduct.
QUESTION 2. Are benefits received from a long term care insurance policy federally taxed as income? ANSWER: No,with rare exceptions.
QUESTION 3. May long term care insurance premiums be paid through a Cafeteria Plan or a Flexible Spending Account (FSA)? ANSWER: No. This is specifically prohibited by the Internal Revenue Code.
QUESTION 4. May long term care insurance premiums be paid through a Health Savings Account (HSA)? ANSWER: Yes, at least partially, but it is complicated.
Click Here for a One-Page Tax Summary With Deductible Amounts for 2016. Provided by the Corporation for Long-Term Care Certification, Inc.
The above Q & A relates only to tax-qualified long term care insurance policies. Almost all "traditional" policies sold today are tax-qualified.
Please see the disclaimer at the lower left corner of this eNewsletter.
Insurancenewsnet.com, one of my industry sources, reports that National Guardian Life will probably start selling long term care insurance in the first quarter of 2016. National Guardian Life is rated A- by A.M. Best, has $2.9 billion in assets, & was established in 1909. No details of available benefits or pricing are yet available.
