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Deductibles for LTC Premiums Will Increase in 2020

11-13-2019 - In 2020 taxpayers can increase the amount they deduct on their federal taxes for long-term care insurance premiums.

2020 Deduction Levels, based on the taxpayer's attained age at the end of the tax year:

  • 40 years or younger: $430 (was $420)
  • More than 40 but not more than 50:  $810 (was $790)
  • More than 50 but not more than 60: $1,630 (was $1,580)
  • More than 60 but not more than 70: $4,350 (was $4,220)
  • 71 and older: $5,430 (was $5,270)

(If you are self-employed, the deductibility rules are slightly different. See your accountant for more information.)

 

In order for premiums to be deductible, the following requirements must be met:

The Policy Must be "Qualified." A policy is qualified if it:

  • Was issued after Jan. 1, 1997 and is in compliance with regulations established by the National Association of Insurance Commissioners, and offers inflation and nonforfeiture protection (whether or not the insured party chooses those options).  Additionally, the policy must contain certain 'triggers' under which benefits can be paid. The insured individual may be able to collect benefits only when he/she requires assistance with two of six "activities of daily living" for at least 90 days; or when a physician certifies that there is cognitive impairment to warrant supervision for safety purposes. 
     
  • Was issued before Jan. 1, 1997 and has been approved by the insurance commissioner of the state in which it was sold. 

Premiums and other unreimbursed medical expenses (including Medicare premiums) must total 10% or more of the insured's adjusted gross income.  Benefits from per diem or indemnity policies, which pay a fixed amount each day, are not considered to be income, except for the amount in excess of the beneficiary's total qualified long-term care expenses or $370 per day (was $360), whichever is greater.

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