The LTCA product portfolio includes the country's leading Tax-Qualified plans. This means you may be entitled to a federal or state tax deduction or credit for the premiums you pay each year. These tax savings go straight to your bottom line and offset the cost of protection.

Best of all, if you go on claim, any reimbursements of your expenses are received income tax-free.

(If your policy pays benefits on a per diem basis-- also known as "indemnity"-- the first $410 per day (2024 indexed) are income tax-free, as are any amounts over this limit to the extent they are offset by actual expenses.)

How Does a Tax-Qualified Policy Work?

While LTCA is not able to provide specific tax advice-- we recommend your CPA for that-- here's a brief overview of the ways in which LTC insurance premiums receive tax-favored status:

For Individuals

Eligible premiums are included with your other itemized medical expenses. See the chart below for the allowable amount. To the extent your itemized medical expenses exceed 7.5% of your adjusted gross income ("AGI") you may take the federal tax deduction.

Nearly thirty states offer some type of deduction or credit. These are too varied to cover here, but the Guide to the right provides an overview.

For Businesses

C-Corp's - The actual premium may be deductible when the business purchases qualified LTC insurance on behalf of its owners, employees, spouses or dependents. Such amounts are not considered income to the employees. As always, benefits are generally received tax-free.

S-Corp's and LLC's - The actual premium may be deductible when the business purchases qualified LTC insurance on behalf of its employees. Such amounts are not considered income to the employees. As always, benefits are generally received tax-free.

The situation is different when the business is paying for the coverage of its owners (or 2% or greater shareholders), spouses and dependents. In this case, the premiums are treated as income. Also, the deduction is capped at the eligible premiums (from the table below).

Additional information for businesses can found here - IRS Publication 535