Finance Quick Answers
What is the tax status for long term care premiums?
Policies issued after January 1, 1997, which provide tax incentives, are classified tax-qualified plans. Policies issued before 1997 were 'grandfathered' into the law and are considered tax-qualified. Premiums for tax-qualified plans are deductible to the extent you itemize and have medical expenses in excess of 7.5% of adjusted gross income. Benefits received are non-taxable.
Policies issued after January 1, 1997, which do not provide tax incentives, are classified as non tax-qualified plans. Premiums for these policies are not tax-deductible and it is not clear whether benefits received are taxable or not.
Dr. Joyce Cavanagh, Former Assistant Professor and State Specialist, Consumer and Family Economics
Last update: Friday, July 25, 2008