Tax deductible limits for long-term care insurance are expected to increase by 6 to 7% next year, according to the American Association for Long-Term Care Insurance.
“One of the little-known benefits for certain long-term care insurance is the ability to deduct some or all of the cost during retirement years,” AALTCI Director Jesse Slome said in a statement. “For a couple older than age 70, the new IRS levels may enable them to deduct almost $12,000.”
Slome noted that the potential tax deduction only applies to long-term care insurance policies that meet the federal government’s tax-qualified requirements.
“Most of the linked benefit or hybrid life insurance policies do not qualify for a possible tax benefit,” he said.
Individuals or couples who purchase long-term care insurance are likely to see the tax benefits only after retirement, because it is then that they are more likely to reach the health expense threshold, Slome said. “That potential tax deduction can be a huge benefit after retirement,” however, he added.
The predicted 2023 deductible limits per individual (with 2022 limits in parentheses):
- For those aged 40 or fewer years: $480 ($450).
- Aged 41 to 50: $890 ($850).
- Aged 51 to 60: $1,790 ($1,6,90).
- Aged 61 to 70: $4,770 ($4,510).
- Aged 71 or more years: $5,960 ($5,640).
A 2018 study by the AALTCI found that 52.1% of long-term care insurance claims start in the home, 28.2% begin in nursing homes and 19.7% start in assisted living communities.
