The Internal Revenue Service (IRS) has announced increased deductibility levels for long-term care insurance policies purchased in 2009. To encourage individuals to purchase long-term care insurance the federal government and many states offer tax deductions and tax incentives that increase yearly.
Tax advantaged long-term care insurance is one of the few remaining significant tax-savings benefits for small business owners. "In certain situations, the cost of long-term care insurance can be fully tax deductible for the business. Even spouses can be covered under a tax-advantaged plan.
There is still time to take advantage of tax deductions in 2008 and also benefit from the increased deductible limits next year. The deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term 'medical care' are as follows:
Eligible Long-Term Care Premiums - For taxable years beginning in 2009, the limitation under S 213(d)(10), regarding eligible long-term care premiums includible in the term "medical care" are as follows:
40 or less: $320
More than 40 but not more than 50: $600
More than 50 but not more than 60: $1,190
More than 60 but not more than 70: $3,180
More than 70: $3,980
There are also tax changes for periodic payments received under Qualified Long-Term Care Insurance contracts or certain life insurance contracts.
For calendar year 2009, the stated dollar amount of the per diem limitation under S 7702B(d)(4), regarding periodic payments received under a qualified long-term care insurance contract or periodic payments received under a life insurance contract that are treated as paid by reason of the death of a chronically ill individual is $280.
Annual Exclusion for Gifts - For calendar year 2009, the first $13,000 of gifts to any person (other than gifts of future interest in property) are not included in the total amount of taxable gifts under S 2503 made during that year. Source: IRS Revenue Procedure 2008-66
To find a comprehensive online directory of over 3,000 insurance professionals who can assist with your long-term care insurance needs, visit the Consumer Information Center of the American Association for Long-Term Care Insurance.