Qualified long-term care expenses and a limited amount of premiums for long-term care insurance are eligible for the medical expense deduction for medical expenses in excess of 7.5 percent of adjusted gross income. The amount of premiums that are eligible for the medical expense deduction vary based on your age at the end of each taxable year, and will be indexed for medical care inflation. Benefits received from a tax-qualified long-term care policy are generally not taxable as income, while benefits received from a policy that is not tax-qualified may be taxable as income. Long-term care policies that are issued currently must meet eligibility requirements in order to be considered tax-qualified. These requirements are as follows:
- You must be certified by a licensed health care professional to be chronically ill;
- You must have a plan of care;
- You must be re-certified as chronically ill on an annual basis.
Expenses for long-term care services cannot be reimbursed under a flexible spending plan. Additionally, long-term care expense reimbursement cannot be offered as part of a cafeteria plan.
In summary
Long-term care insurance does NOT help pay for doctors, hospitals or medications. Many insurance companies carry long-term care insurance. To learn more about long-term care insurance, obtain a copy of the Shopper’s Guide to Long-Term Care Insurance by contacting the National Association of Insurance Commissioners.
