IRS Fails To Increase Tax Deductible Limits For Long-Term Care Insurance
"Tax deductibility is one of the best-kept secrets and benefits potentially for millions of seniors," explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI). "Deductibility becomes especially valuable after retirement when income decreases and health costs generally go up."
The Internal Revenue Service just announced the 2022 limits for tax deductibility of long-term care insurance premiums. "For the first time since we've reported this information, the IRS has failed to increase the level," Slome reports. "That said, the maximum deductibility remains high and the benefit for older individuals and couples is significant."
According to IRS Revenue Procedure 2021-45, a couple age 70 or older who both have the right kind of long-term care insurance policy can deduct as much as $11,280 in 2022. This is the same as the maximum for 2021 and an increase from the $10,860 limit for 2020. The 2019 limit was $10,540.
"The special tax advantages permitted by the IRS are only available for tax-qualified long-term care insurance policies," Slome explains. Some 50,000 traditional long-term care insurance policies are being sold annually according to AALTCI. "The majority of sales today are linked-benefit policies, some of which may offer some tax deduction for the LTC coverage."
Slome notes that the tax deductibility benefit often does not come into play when the individual or the couple first purchase insurance protection. "Before retirement most people are not deducting medical-related expenses,"
2022 Tax Deductibility
Attained Age Before Close of Taxable Year 2022 / 2021 Limit
40 or less $450
More than 40 but not more than 50 $850
More than 50 but not more than 60 $1,690
More than 60 but not more than 70 $4,520
More than 70 $5,640
The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions. See deductibility information at https://www.aaltci.org/
To see long-term care insurance tax deductible limits, visit the organization's website https://www.aaltci.org/