If affordability is one of the concerns keeping you from investing in a LTCI policy, consider the tax benefits that go along with LTCI.
What Congress isn’t Doing to Help
It would be wonderful to be able to say that Congress has allowed all LTCI policyholders to deduct the full premium on their taxes.
Unfortunately, our lawmakers have not yet enacted such legislation. As is often the case, they are waiting until the system is almost broke before they will do anything like that. And with the approaching flood of baby boomers quickly becoming seniors, it doesn`t take much to realize that we have a train heading off the tracks at full speed.
Tax Benefits You Can Reap Now
However, despite the impending train wreck, there are some tax benefits that have been approved thus far. If you are considering the purchase of LTCI you should know about them. Currently, most of the tax deduction benefits go to employers and the self-employed. If you don;t fall into that category, Congress requires you to itemize your LTCI policy premiums along with all other health expenses during the year. Anything over 7.5% of your adjusted gross income can be used as a deduction. If you have a health savings account (also known as an HSA medical plan), however, you may be able to deduct more even if you are an employee or retired person. If you are a sole proprietor, a partner, or own an S corporation or LLC even if it is just a small business you can eliminate that 7.5% threshold and instead deduct premiums up to a certain maximum that increases with age.